The research firm reports that one-year returns from U.S. venture capital rose from 6.4% at the end of Q2 2010 to 8.2% by the end of Q3 2010, based on data from nearly 1,300 funds raised between 1981 and 2010. This reflects public equity market value increases during the time period, and also an increase in VC-backed IPO and M&A activity. There also was a small improvement in three-year returns, albeit from -2.7% at the end of Q2 to -2.06% at the end of Q3 2010 (note: venture capital return data is always reported on a lag).

So far, so good. The problem is that venture capital is a long-term asset class. In fact, that’s supposed to be one of its best selling points (and is what the industry uses on Capitol Hill to fight against SEC registration or increased taxation proposals).

Cambridge reports that 10-year returns fell from a miserable -4.2% to a downright horrid -4.64% over the relevant period. Five-year returns fell from 4.3% to 4.25%.

Even worse is the vintage-year data, which tracks VC fund performance based on the year in which the fund was raised.

The median net return to VC fund investors has not been positive for any vintage year since 1998. Just think about that for a moment. Despite the past decade’s many hits (Google, YouTube, EqualLogic, etc.), the typical VC fund has lost money for its limited partners. Even the top-quartile benchmarks aren’t very impressive over the past decade, with the best figure coming in at 5.59% for 2001 vintage funds.

No wonder how many institutional investors have mostly turned their back on venture capital as an asset class. If things don’t turn around soon, even some of the holdouts might begin to reconsider.

Cambridge today also released private equity performance data, showing positive numbers across the board. Private equity outperformed venture capital for the 1, 3, 5 and 10-year periods. It fell short for the 15 and 20-year periods.