Fund Performance: Venture Funds From 2007 See Distributions Gain

Last year was the first year since the dot-com bubble collapsed that venture funds collectively returned more cash to limited partners than they called.

There is more work to be done. But the gains have been welcomed, especially by the 2007 venture funds in the Pennsylvania State Employees’ Retirement System private equity portfolio.

The funds were among those seeing substantial distributions gains in 2012, according to a SERS portfolio report updated to year end. None has yet returned more capital than called. But the year gave a number a boost toward the goal.

The funds are among 53 venture funds SERS has with vintages from 2003 to 2012. Only two of the funds have returned more capital than called, but last year almost three quarters achieved increases in overall distributions.

Eleven of the funds from the 10-year period did not see new distributions during 2012 and four funds saw a reduction in distributions, largely because the SERS commitment level to the funds declined.

Among the gainers from 2007 is Abingworth Bioventures V, which increased its distributions to $12.2 million from $1.9 million at the end of 2011 on called capital of $22.5 million.

The 2007 Battery Ventures III saw its distributions grow to $10.9 million from $1 million at the end of 2011. The fund has benefited from IPOs of Guidewire Software and Bazaarvoice, according to Thomson Reuters (publisher of VCJ).

Another big advance came from JMI Equity Fund VI, where distributions rose to $9.1 million from zero a year prior on an investment of $39.1 million.

Other funds, such as Highland Consumer Fund I, have yet to return capital. With respect to declining distributions, the 2008 Morgenthaler Partners IX is one of four funds in the SERS portfolio to show a reduction in distributions during the year. This is because SERS reduced its commitment to the fund to $20 million from $35 million in December 2011, according to the portfolio reports. Called capital and distributions fell as a result.

The accompanying chart shows the SERS venture funds from 2007 to 2012 with commitments, capital contributions and distributions. The money manager releases no additional data in its portfolio reports.