Christopher Swope was GOVERNING's executive editor.E-mail: email@example.com
Public pension funds have begun releasing data on their venture- capital investments, something they had not done in the past.
Pressure for the data is coming from the media. In reaction to a public records request from the Houston Chronicle, the University of Texas pension fund announced in October that it would make public the performance of its private equity investments. "The big corporate disasters we've seen recently really demand a more open and transparent environment, especially when we're talking about public funds," says Bob Boldt, president of the Texas fund, known as UTIMCO.
Retirement funds for Oregon's public employees and California's teachers took similar action recently, as did California's massive pension fund known as CalPERS, which settled a lawsuit with the San Jose Mercury News in December. CalPERS agreed not only to release data on its venture investments but also to develop a standard for transparency on venture-fund investments.
The wave of disclosures, however, is rankling the venture-capital industry, which is known for taking big risks on small upstart companies. Venture firms argue that disclosure is trickier than with stocks or bonds, that the investments tend to linger in the red for some time before turning a profit--a pattern that, they say, journalists or politicians could easily misrepresent.
A few venture firms are angry enough about the disclosure rules that they've vowed to stop doing business with public pensions in the future. But Boldt says investment lawyers are already crafting ways around the rules. "In some states, lawyers are urging general partners to not give us any information on paper, for our eyes only," Boldt says. "If we don't have it, we can't disclose it."
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