Secondary purchases have brought big IRRs to the Hawaii Employees’ Retirement System’s search for jewels amid the venture capital rubble of the dot-com crash.
A pair of pre-crash venture funds still unwinding portfolios from 17 years ago also have put up impressive numbers for the pension manager. But many funds from the troubled bubble period continue to struggle for returns, according to a recent portfolio report.
Hawaii ERS owns 21 active venture funds with investment dates of 1998 to 2003, including ones from New Enterprise Associates, Oak Investment Partners, U.S. Venture Partners, Morgenthaler Ventures (now known as Canvas Venture Fund) and Austin Ventures (which is close to winding down).
Results are mixed. Pulling out the pension’s five secondary purchases, the portfolio has eight funds with positive IRRs and eight funds with negative ones.
A pair of 1998 funds emerges as big winners. Oak Investment Partners VIII had an IRR of 54.32 percent as of December 2014, according to the report. New Enterprise Associates VIII had an IRR of 31.09 percent. Both funds hold investments seeking liquidity.
M/C Venture Partners V from 2000 also had a respectable 8.38 percent IRR as of December, considering the period it managed through.
Other funds were less lucky. U.S. Venture Partners VII and Morgenthaler Partners VI, both from 2000, were at the bottom of the portfolio.
Worth noting are the big scores Hawaii ERS has had with its secondaries from the period, despite the small size of the investments. A 2003 secondary purchase of Oak’s 1998 fund has brought at IRR of 175.65 percent.
The accompanying table lists the 21 funds with their commitments, distributions and IRRs.