Funds from Union Square Ventures, Sofinnova Ventures and Technology Crossover Ventures are among the top performers in the Oregon Public Employees Retirement System’s venture portfolio.
This is no surprise. The fund families have a good performance track record for LPs in Oregon and elsewhere.
What’s interesting is the lead they have over other OPERS funds.
A VCJ analysis of 22 of the money manager’s venture and venture-related funds from 2004 to 2011 found five with double digit IRRs. All five are funds from the three firms. The next nearest IRR was 7.7% for a fund from VantagePoint Capital Partners.
It is also worth noting that these funds have strengthened their lead, for the most part, during 2011 and 2012. Early stage fund Union Square Ventures 2004 saw its investment multiple rise from 9.01x in March 2011 to 10.33x in March 2012, according to OPERS public portfolio reports. Sofinnova Venture Partners VII generated an IRR of 20.4% as of March 2012 compared to 9.7% a year earlier, the reports show.
Funds elsewhere in the portfolio generally saw smaller gains or no gains at all.
Pointing out the have-and-have-not nature of venture capital is nothing new. The gap between good and bad funds often is large. The OPERS portfolio reinforces the rule. Nonetheless, it is interesting to observe that the gap may have widened a bit in the past 12 months or so.
In the accompanying chart, we show the 22 vintage 2004 to 2011 venture funds in the OPERS portfolio with their IRRs and investment multiples. The data stems from March 2012 and March 2011 portfolio reports.
Six of the funds—including three from 2011 and three from 2010—are too young to draw solid conclusions, even though Union Square’s 2010 Opportunity Fund appears to be off to a good start, judging by its portfolio value and investment multiple. The rest of the funds are fair game.
Overall, 11 of the funds from the period have positive IRRs and five have negative ones.
IRRs are not reported for the youngest funds. The portfolio is evenly divided among early stage, later stage and balanced funds.
Photo by Mathieu Belanger, Reuters.