Ohio backs down; VC stands tall

After sidestepping the latest threat to portfolio-company data disclosure, VCs are growing blithe. By Ken MacFadyen.

While the private equity press has created an uproar over the recent disclosure threat posed by the Ohio Bureau of Workers’ Compensation, some in the venture community have barely noticed.

The brouhaha began in December, when the Ohio BWC said it would hold nothing back when it released a report on its private equity programme. Responding to an open records request from The Columbus Dispatch, the pension was prepared to release a detailed report on the performance of the funds in its portfolio, including the underlying portfolio-company performance data.

Mark Perry, general partner, NEA 

Venture groups have gone through this dance before. In October of the previous year, Texas Attorney General Greg Abbott said publicly that underlying portfolio company data should be subject to FOIA (Freedom of Information Act) requests.

Lawyers, venture groups and even other limited partners rallied against the initiative. The immediate impact following the disclosure was that one of the state’s pensions, UTIMCO, was turned away from making follow on investments with Prospect Venture Partners, Foundation Capital, and Austin Ventures, three firms the plan had invested with before.

The state eventually backed off, and passed a law clarifying exactly what type of information was subject to disclosure requests. Portfolio company data was ultimately protected.

The disclosure battle has been waged since the early part of this decade, beginning in 2002, when CalPERS was the subject of a FOIA battle with the San Jose Mercury News. California, like Texas, also passed into law clarifications of what exactly is open to FOIA requests, and underlying asset information was protected in the state.

The general theme is that while occasional flare-ups may happen, the overriding tide against full disclosure has protected the underlying assets of private equity portfolios – and ultimately their revenue streams, trade secrets and competitive information. Today, many venture capitalists are of the impression that the battle has been won.

To be sure, groups such as the National Venture Capital Association came out against the Ohio BWC’s initial disclosure threats, and groups directly affected were on tenterhooks, but for the most part, many groups have put the issue behind them.

“I think that whole movement has backed down quite a bit. I don’t really see people all that worried about it anymore,” Mark Perry, a general partner at NEA tells PEO.

He further adds, “We’ll continue to raise more money from the public pension funds.”

In the end, Ohio backed down, giving venture another notch on its belt.