Those in the venture-backed sector are well aware of the current buoyancy of returns. For outsiders, the health of the industry was confirmed this month by publication of an EVCA report showing that venture returned 35.3 per cent last year, outstripping buyouts which returned 29.6 per cent. Despite these excellent figures, there are still doubts over the asset class, not least among the large institutions that have largely ignored it since 2001. They cannot be entirely faulted for their wariness. After all, five-year returns are still in negative territory and three-year returns are nothing to get too excited about.

But the point is, surely you cannot hope to profit from any asset class by running scared from it in the lean times or by trying to time its peaks and troughs. So withdrawing from it in 2000-2001 when returns were at their nadir hardly seems like a good strategy - particularly as venture typically represents only a small part of the portfolio. Likewise, piling in when valuations are already fair seems unwise. But that is exactly what the larger investors appear to have done. Smelling high returns, investors ploughed E17.5bn into venture in 2006, compared to E10.9bn in 2005 and E8.8bn in 2004. Pension fund trustees are bound by law to act under "prudent man" rules. But is their behaviour really prudent?