Fund Performance: UC Increases Its Commitment to VC

The University of California’s commitments to venture capital drifted up over the past couple years as the nation began climbing out of the economic depths of 2009.

The long time venture investor saw commitments to new funds rise to $171.9 million in 2011, a 52% hike from the previous year. Allocations also ticked up in 2010, according to a VCJ analysis of its most recent portfolio report.

The LP’s greater focus on venture is an interesting counterpoint to recent criticism of the industry, including from the Kauffman Foundation report, which assailed the industry for poor returns, and the California Public Employees’ Retirement System, which announced plans to de-emphasize the venture asset class.

The UC Board of Regents, considered a savvy, attentive investor, shows a continuing tendency to stick with familiar funds. Its 2011 commitment to Khosla Ventures IV is its third to a Khosla Ventures fund, the December 2011 portfolio report shows. A decision to sign up with Bessemer Venture Partners VIII follows the university’s commitment to the Bessemer Venture Partners’ previous 2007 fund.

The final two 2011 commitments, to W Capital Partners III and GGV Capital IV, were made to firms the Regents has also done business with in the past.

In the two accompanying charts, VCJ shows fund commitments by year and by size. It is interesting to note that the three largest commitments made over the five years from 2007 to 2011, each of $60 million, have gone to two Khosla Ventures funds and one W Capital Partners fund.

The next largest commitments, each of $50 million, again target W Capital and two funds from Insight Venture Partners.

Photo of Vinod Khosla, founder of Khosla Ventures, which is a beneficiary of UC Regents’ commitments to venture capital. Photo by Stephen Lam, Reuters.