VC-related funds perform well for NJ despite low allocation

New Jersey Division of Investments, a manager of seven state pension plans with $76 billion in assets under management, has not made a venture-related investment since 2014 when it committed $100 million to Technology Crossover Ventures’ $2.23 billion eighth fund.

However, the eight venture-focused positions in the division’s portfolio have been performing relatively well.

Topping the list of best venture performers is Fairview Capstone Partners I, a fund of funds managed by Fairview Capital Partners, which has delivered a 3.04x investment multiple, as of a March 2019 performance calculation.

Khosla Ventures’ $1.05 billion fourth fund has returned the state pensions a multiple of 2.71x on invested capital, according to the LP’s most recent report.

The weakest performer on the list was the division’s $40 million, 2012 commitment to Tenaya Capital’s $372 million fourth fund, which provided the pension with a 1.18x investment multiple. The Portola Valley, California-based late-stage firm’s notable exits include IPOs from New Relic in 2014 and Eventbrite’s debut in 2018.

Although the state pension plans have an actual 10.25 percent allocation to private equity, Venture Capital Journal estimates that only 5 percent of those assets, or about 0.5 percent of total AUMs, are held in venture-related funds.

In late May, the division announced it is merging buyouts-venture capital and private credit into one private equity asset class and increasing its total PE allocation by 1.75 percent to 12 percent.

Up until May, New Jersey tracked buyouts and venture capital assets separately from debt-related private assets. The buyouts-venture capital category returned 12.82 percent and 13.80 percent over a one-year and five-year period, according to May 29, 2019 report, the latest available.

To download the full version of the performance results below, click here: New Jersey Division of Investment venture portfolio performance as of 3-2019.

New Jersey Division of Investment venture portfolio

Fund Vintage Investment Multiple as of 03/19
Fairview Capstone Partners 2007 3.04*
Khosla Ventures IV 2012 2.71
NB/NJ Custom Investment Fund 2007 1.79
NB Crossroads Fund XVIII 2006 1.79*
Fairview Capstone Partners II 2008 1.77*
PEG Pooled VC Institutional III 2006 1.77
TCV VIII 2014 1.47
Tenaya Capital VI 2012 1.18
Source: New Jersey Division of Investment report, May 2019. Performance as of March 2019.
Note: Some investment multiples marked by * were updated only though December 2018.