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Quoted from the hbr article above:

" 2013 annual industry performance data from Cambridge Associates shows that venture capital continues to underperform the S&P 500, NASDAQ and Russell 2000."

Why institutional investors throw money at VC instead of much better options?

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Just because the aggregate of VC firms under perform doesn't mean there are exceptions.

When you invest in market indexes, your gains are relatively capped. There's more volatility in venture capital, but that's the idea - some years you're in the dumps, other times you're investing in Dropbox, AirBnb and Uber, at the same time.

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