Oregon PERS Warms Up to Venture

The Oregon Public Employees Retirement System has had a start-stop relationship with venture capital during the past two decades. That involvement has become more start than stop in recent years.

The nearly $60 billion pension fund expanded its commitments to venture beginning in 2006 and hasn’t looked back. The results aren’t yet clear.

It is possible the bet could pay off handsomely if more welcoming exit markets for startups resume later this year or next.

The money manager has taken a position in 25 funds since 1994, according to a VCJ analysis of Oregon PERS online portfolio data, updated through March 31.

Commitments to venture total $1.05 billion with more than three-quarters of the money, or $838.5 million, promised since 2005, the analysis found.

Returns have been mixed and cash out still trails cash in. So far, cash turned over to the funds comes to $640 million and capital returned amounts to $180.8 million. Good returns from its numerous 2006 funds could alter this imbalance significantly.

Several funds have been big winners and others could be. An OVP Venture Partners’ fund from 1997 has a 63.9% IRR, and a blockbuster 2004 Union Square Ventures fund boasts an IRR of 85.9%.

Unfortunately, investments made in 2000 and 2001 were poorly timed in retrospect and the decision to pump up commitments in 2006 has yet to prove itself.

What’s evident in the pension fund’s dealings with venture is a desire to work with a small handful of firms, 12 in all. It is a holder of multiple funds from Union Square Ventures, Essex Woodlands Health Ventures, VantagePoint Capital Partners and OVP Venture Partners.

The accompanying table is a list of the pension fund’s venture holdings with cash positions and IRRs, where available.

Mark Boslet can be reached at mark.boslet@thomsonreuters.com on Twitter at @mgboz.