Prop 23 Update: VC profits not growing in CA according to one analysis

Russ Steele

If you recall during the Prop 23 debates, we were told that Venture Capitalist were investing in green technology and those investments were going to revitalize the California economy under AB-32. Here is a little insight into how wells some of those leading “go green” VC investors are doing these days.

Distributions from Kleiner and Sequoia Have Noticeably Slowed Since 2003: peHUB Analysis

By: Mark Boslet

The University of California has seen cash distributions from Sequoia Capital and Kleiner Perkins Caufield & Byers decline over the past eight years, as dot-com era investments apparently haven’t been able to match the spectacular returns from earlier funds, according to peHUB’s analysis of data provided by the university system.

peHUB sought performance data for the funds after learning that the University of California Board of Regents had not published updated returns for individual Sequoia, Kleiner and Accel Partners funds since 2003,which may be a violation of state law. The university regularly publishes return data for more than 60 other funds in its venture portfolio.

In response to peHUB’s request, the Board of Regents said that it had not received individual fund performance data since 2003 from Kleiner and Sequoia. It chose to release minimal “aggregate” performance data for the 10 Kleiner funds and 10 Sequoia funds in its portfolio. The board disclosed aggregate drawdowns, distributions and net asset value as of Dec. 31 for both Kleiner and Sequoia. (It also provided those three data points for a single Accel fund in its portfolio.)

The aggregate data show that the University of California invested about $262 million in 20 funds from Sequoia and Kleiner over the past two decades and received about $1.87 billion in distributions, for a 7.1x return.

However, the majority of the distributions — $1.45 billion (or 78%) — came prior to 2004 and primarily from a handful of blockbuster funds from the early and mid 1990s, according to peHUB’s analysis of the aggregate data and data released by the university in 2003. In the past eight years, the LP has received $411 million in combined distributions from Kleiner and Sequoia — suggesting returns between 3x and 4x during that period, according to the analysis.

Sorry, I am unable to provide a link to the rest of the article, as it came by email from a savvy market watcher. While is lear that investors are get a return on their money, it is also clear that “go green” investment may not be the “big deal” we were promised during the Prop 23/AB-32 debates.

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

4 Responses to Prop 23 Update: VC profits not growing in CA according to one analysis

  1. Russ says:

    I forgot that Al Gore was associated with Kleiner Perkins Caufield and Byers.

    Kleiner Perkins Caufield & Byers and Generation Investment Management have announced a global collaboration to find, fund and accelerate green business, technology and policy solutions with the greatest potential to help solve the current climate crisis. This partnership will provide funding and global business-building expertise to a range of businesses, both public and private, and to entrepreneurs. As a result of the collaboration, the chairman and co-founder of Generation, former Vice President of the United States Al Gore, will join KPCB as a Partner. KPCB has already committed $200 million to green tech ventures.

  2. stevefrisch says:

    Not wanting to post a naked link I will simply say that not all analysts share your skepticism; and that the report you posted stated that “Sequoia Capital and Kleiner Perkins Caufield & Byers decline over the past eight years, as dot-com era investments apparently haven’t been able to match the spectacular returns from earlier funds”.

    In short, what you posted has nothing to do with the general performance of green tech investments in the last 5 years, it is a report on two players from aggregated funds, and no conclusions can be drawn from it.

    http://www.renewablesbiz.com/article/11/11/venture-capital-sees-green

  3. Russ says:

    Yes, it was just aggregated data, since the University has failed to report the individual results since 2003. What are they hiding? Why are they hiding the information on the performance of individual green funds? If they were blowing out the market, you would expect to see some chest pounding results. Instead someone is hiding the results of the individual funds.

  4. stevefrisch says:

    Well if you want to see individual fund results from a variety of firms you can just go look at them. Almost every firm has prospectus and annual report data available.

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