Washington State’s Cold Shoulder for Venture

The Washington State Investment Board, like other pension funds, has had a waning appetite for venture.

WSIB, which manages one of the nation’s oldest and largest private equity portfolios, hasn’t made an investment in a venture fund since 2006. Only 17 of its 61 venture capital holdings date from 2000 or later.

Still, venture’s internal rate of return of 10.3% ranks favorably to other private equity sub sectors, including large buyout funds, 9.58%; mezzanine funds, 8.23%; mega buyout funds, 16.02%.

This data comes from the most recently released investment report updating the portfolio through Sept. 30, 2010. A complete list of its private equity returns is available online at http://www.sib.wa.gov/financial/invrep_ir.html.

The organization’s footprint in the financial world is gargantuan. The board manages investments for 17 state retirement plans and handles funds for 22 public universities and other institutions. Assets under management come to $79.4 billion, of which $14.7 billion have been placed in private equity.

Here are several key observations from the recent venture report:

Overall capital committed: $3.5 billion

Capital paid in: $3.2 billion

Capital distributed: $3.05 billion

Market value of investments: $1.27 billion

Total value (market value and capital distributed): $4.3 billion

Un-funded commitment: $333 million

The top two IRRs come from Menlo Ventures VII (1997 vintage), with a net IRR of 135.58%; and Austin Ventures IV (1994), with a net IRR of 73.23 percent.

The worst two performing venture funds are KBA Partners II (1989), at 42.07%; and Telecom Partners III (1999), at 40.56 percent.