LPs

Ray Rothrock abstains from UTIMCO commitment vote to new VC fund

-
private equity, pension fund, Utimco, Venrock, venture capital, Ray Rothrock
Ray Rothrock, board member at Utimco and partner emeritus at Venrock. Photo courtesy Venrock.
  • UTIMCO director Rothrock holds stake in endowment’s newest fund
  • UTIMCO approves $20 mln commitment to Underscore
  • Rothrock’s LP interest not seen as significant conflict

One of UTIMCO’s newest board members, Ray Rothrock, abstained from a recent vote on a venture capital investment to avoid a conflict of interest.

The $35.5 billion endowment approved a $20 million commitment to Underscore.VC’s debut fund at its Aug. 23 meeting, spokeswoman Amanda Hopper told Buyouts.

Rothrock, a partner emeritus at VC firm Venrock, acquired a limited partnership stake in the Boston venture capital firm’s debut fund before he joined UTIMCO’s board earlier this year.

Rothrock took over John White’s seat on the UTIMCO board in April. He must abstain from any votes or deliberation relating to UTIMCO’s commitment to Underscore, according to endowment documents.

How large a stake Rothrock took in Underscore’s debut vehicle is unclear, but it wasn’t considered large enough, or relevant enough, to prohibit UTIMCO from committing to the fund as well.

If a board member’s stake equals 5 percent or more of a fund’s fair market value, or shares, UTIMCO would be barred from making a commitment, according to UTIMCO’s ethics policy. UTIMCO is also prohibited from investing in a fund if its returns equaled 5 percent or more of a board member’s gross income the previous year.

“It’s very rare,” Hopper said, commenting on Rothrock’s abstention. “This is probably the first time I’ve seen it in the last five or six years.”

It’s not unusual for venture capitalists to invest in their colleagues’ funds, Hopper noted, adding that Rothrock’s investment did not curtail or hinder staff’s assessment of Underscore. Staff did not believe his investment stake would be an issue moving forward.

“We have to do our own underwriting for every investment we do,” she said.

Michael Skok, John Pearce and C.A. Webb co-founded Underscore earlier this year. The firm raised $75 million through an unconventional fund structure that allowed certain portfolio company advisers to take a share of the general partner’s carried interest, according to a Wall Street Journal report.

The firm completed its first investment in open source marketing automation business Mautic earlier this year.

Rothrock and Underscore could not be reached for comment.

Action Item: For more information about UTIMCO: www.utimco.org