Mid-Life Venture Funds Break Into the Black: A Look at UTIMCO’s Mid-Decade Portfolio: Slideshow


Venture fund performance began to recover from the excesses of the bubble years in 2003 and 2004 before dipping again in the following two years of 2005 and 2006.

There are signs these now mid-life funds with ’05 and ’06 vintages are starting to hit a better stride. If the University of Texas Management Company’s portfolio is a broad reflection, median fund IRRs rose into the black toward the end of last year with some partnerships showing dramatic gains. However, cash distributions remain low.

The Texas money manager holds 12 venture funds from the two-year period with commitments of more than $300 million, according to a peHUB analysis of its November 2011 portfolio report. The funds are pretty evenly split between technology and health care, with the majority mixing investments in both. They favor a diversified and growth-stage approach to placing capital. (The peHUB analysis included a handful of venture-related growth funds.)

What’s striking is that 10 of the funds posted IRRs gains over the six months from May to November with the median IRR at the end of the period 1.6%. The median IRR as of May was -2.8%.

The fund with the strongest IRR was the Sofinnova Venture Partner VII, which saw its 14.80% internal rate of return rise from 9.22% in May. The fund continued to call capital over the period and has yet to return total contributions in cash. Second on the list was TCV VI from Technology Crossover Ventures with an IRR of 11.01%, compared with 7.71% in May. The fund’s capital distributions rose sharply.

Last Monday’s slideshow focused on UTIMCO’s 2010 and 2011 venture investments and its decision to favor early stage technology funds from managers such as the Foundry Group, Union Square Ventures, True Ventures and IA Ventures.

This week we show the endowment’s 2005 and 2006 venture funds with called capital, distributions and IRRs from both the May and November. As always, we start with the worst IRRs and finish with the best.

The slideshow is below.

Photo courtesy of Shutterstock.

[slideshow]

[slide title=”No. 12: Care Capital Investments III”]

Vintage: 2005

Firm: Care Capital

Commitment: $40 million

Cash In: $24 million

Cash Out: $174,740

Portfolio Value: $17.7 million

November 2011 IRR: -11.6%

May 2011 IRR: -14.87%

[slide title=”No. 11: Austin Ventures IX”]

Vintage: 2005

Firm: Austin Ventures

Commitment: $17.3 million

Cash In: $15.5 million

Cash Out: $1.4 million

Portfolio Value: $14.4 million

November 2011 IRR:  0.39%

May 2011 IRR: -3.84%

[slide title=”No. 10: Artiman Ventures II”]

Vintage: 2006

Firm: Artiman Ventures

Commitment: $30 million

Cash In: $25.3 million

Cash Out: 0

Portfolio Value: $26.1 million

November 2011 IRR: 1.26%

May 2011 IRR:  -7.99%

[slide title=”No. 9: Integral Capital Partners VII”]

Vintage: 2005

Firm: Integral Capital Partners

Commitment: NA

Cash In: $1.9 million

Cash Out: $1.5 million

Portfolio Value: $529,000

November 2011 IRR: 2.93%

May 2011 IRR: 2.89%

[slide title=”No. 8: PTV Sciences II”]

Vintage: 2006

Firm: Pinto Technology Ventures

Commitment: $50 million

Cash In: $43.2 million

Cash Out: $53,000

Portfolio Value: $47.8 million

November 2011 IRR: 3.77%

May 2011 IRR: 3.97%

[slide title=”No. 7: Morgenthaler Partners VIII”]

Vintage: 2005

Firm: Morgenthaler Management Partners

Commitment: $35 million

Cash In: $29.8 million

Cash Out: $11.1 million

Portfolio Value: $22.7 million

November 2011 IRR: 4.35%

May 2011 IRR: 0.66%

[slide title=”No. 6: Ampersand 2006 Limited Partnership”]

Vintage: 2005

Firm: Ampersand Ventures

Commitment: $25 million

Cash In: $19.8 million

Cash Out: $5.9 million

Portfolio Value: $17.3 million

November 2011 IRR: 4.8%

May 2011 IRR: 4.01%

[slide title=”No. 5: Escalate Capital I”]

Vintage: 2005

Firm: Escalate Capital

Commitment: $25 million

Cash In: $22.4 million

Cash Out: $11.3 million

Portfolio Value: $17.2 million

November 2011 IRR: 5.97%

May 2011 IRR: 5.88%

[slide title=”No. 4: Polaris Venture Partners V”]

Vintage: 2006

Firm: Polaris Venture Partners

Commitment: $25 million

Cash In: $20.4 million

Cash Out: $1.4 million

Portfolio Value: $23.7 million

November 2011 IRR: 7.77%

May 2011 IRR: 6.13%

[slide title=”No. 3: Knightsbridge Venture Completion 2005″]

Vintage: NA

Firm: Knightsbridge Advisors

Commitment: NA

Cash In: $22.4 million

Cash Out: $25.1 million

Portfolio Value: 0

November 2011 IRR: 9.11%

May 2011 IRR:  9.11%

[slide title=”No. 2: TCV VI”]

Vintage: 2005

Firm: Technology Crossover Ventures

Commitment: $35 million

Cash In: $33.8 million

Cash Out: $30.6 million

Portfolio Value: $14.6 million

November 2011 IRR: 11.01%

May 2011 IRR: 7.71%

[slide title=”No. 1: Sofinnova Ventures Partners VII”]

Vintage: 2006

Firm: Sofinnova Ventures

Commitment: $20 million

Cash In: $14 million

Cash Out: $5.7 million

Portfolio Value: $14.1 million

November 2011 IRR: 14.8%

May 2011 IRR: 9.22%

[/slideshow]