Venture returns began ticking up almost a decade ago when IRRs almost doubled from a year earlier. The year of this turnabout was 2007 and the pooled IRR for the vintage grew to 16.82 percent as of this year’s second quarter, according to Cambridge Associates.
If you need a reminder of what these vintages brought LPs, turn to Massachusetts Pension Reserves Investment Management Board’s portfolio. The money manager has 13 funds from 2007 to 2010, and returns at all but two remain in the high teens or greater, sometimes substantially greater.
It is a reflection of the better times in the business.
The top fund in the portfolio is Flagship Ventures Fund IV from 2010, which outperformed the Union Square Ventures Opportunity Fund of the same vintage, according to a recent portfolio report. No. 3 in the portfolio is Spark Capital II.
The portfolio is diversified, with an even mix of early-, late- and multistage funds. Five are less than $300 million in size, another five are between $300 million and $750 million and two exceed $1 billion.
The Flagship Ventures fund mentioned above posted an 81.65 percent IRR as of December, the report shows. The $270 million fund invested in at least five companies that went public, according to data from Thomson Reuters, including Editas Medicine, Seres Therapeutics and Syros Pharmaceuticals.
Union Square Ventures’ opportunity fund followed with an IRR of 64.56 percent.
In third place, Spark Capital II from 2007 held onto a 52.72 percent IRR, falling from 64.03 percent two years earlier, the report shows.
The fund under perhaps the greatest pressure was Union Square Ventures 2008, which saw its IRR drop to 23.45 percent from 42.14 percent two years earlier. Flagship’s 2007 fund also lost some ground.
The accompanying table lists the 13 funds with their IRRs.