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The University of California—under court order—finally posted all of the investment data for their risky venture capital funds, and the numbers aren’t pretty. 

Long the crown jewel of UC’s employee retirement portfolio, the funds have slid below benchmarks and plummeted more than 20 percent in recent years. 

As of June, they had dropped 21.5 percent over the past three years, 8.6 percent below their self-picked benchmark based on the Russell 3000, a tally that includes 98 percent of U.S. stocks. 

Last year, the funds barely underperformed the benchmark, losing 21.5 percent, compared to a 21.4 drop for the Russell 3000. 

“The more information we get, the more questions we want answered,” said Jason Barnett a spokesperson for the Coalition of University Employees (CUE), which joined the San Jose Mercury News in a lawsuit to force the university to release the data. “We want to know what they were thinking over the last three years putting more and more money into the investments when it’s a bad market.” 

Venture capital funds have taken a beating recently after years of unprecedented returns because fund managers raised too much money and began indiscriminately throwing it at failing start-ups. In 2002, investment opportunities were so bleak that some venture firms actually returned money to their customers rather than invest it. 

The university’s private equity funds have long outpaced other investments. Although they account for just under two percent of all investments, they account for eight percent of returns for the university’s $55 billion fund, according to spokesperson Trey Davis. 

New funds lagged far behind older funds. The 13 venture capital funds begun in 2000 or 2001 lost an average of 28 percent. That put UC on a par with other public entities that are obligated to release private investment data. The University of Michigan, for instance, saw its 15 new venture capital funds decline 26 percent. 

University officials and investment professionals cautioned that the performance indicators—known as individual rates of return (IRR)—are arbitrary and tend to start poorly when the fund is pouring money into private ventures that are not yet making profits. 

“If the vintage year is 2002 and the fund is negative 20 percent, that doesn’t mean that much,” said Danielle Fugazy, a reporter at Private Equity Week. 

Jeanne Metzger, spokesperson for the National Venture Capital Association (NVCP) called IRRs “squishy numbers” because private investments have no true benchmarks, and consequently IRRs are somewhat ambiguous and fluctuate drastically. 

UC fought to keep its investment returns private, fearing that public disclosure of IRRs would shut the university out of exclusive funds. After a federal judge ruled against them, UC released the IRRs and several weeks ago—responding to further requests from the Mercury News and CUE—provided the beginning year and amounts invested and cashed out for each fund and posted them on its web page. 

The jury is still out as to whether releasing the data will limit UC’s investment options. Top-tier firm Sequoia Capital banished UC from its new fund and asked them to withdraw from its nine other funds—which have netted UC investment returns of $508 million on investments of $110 million over the past 22 years.  

In all, private equity investments increased 26.5 percent over the last ten years versus 13.4 percent for the benchmark. During the same period UC’s equity funds increased 9.4 percent compared to 10.3 percent for the benchmark. 

But Brad Pacheco, spokesperson for the California Public Employees' Retirement System (CalPERS), said the agency has not been booted from any funds since it began disclosing IRRs last year, also in response to a Mercury News lawsuit. “We felt in the short term there was the possibility that we’d be kept out of funds, but so far the funds have been cooperative,” he said. 

Metzger said the that since few new funds have been launched in the past couple of years, it’s too early to know how firms will handle public entities required to release IRRs. She warned that with fewer investment opportunities on the horizon, firms could be more finicky in picking their clients. 

For venture capital firms, the biggest fear is not so much the release of information contained in the IRRs, Fugazy said, but that ultimately judges could require public entities like UC Berkeley to release more extensive data on the individual companies invested within the fund. 

Venture capital funds manage the affairs of the nascent companies and fear that such information would give rivals a competitive advantage.