Alameda County Superior Court orders UC to disclose venture capital investments

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The Alameda County Superior Court ruled Monday that the University of California must disclose returns on its investments with two venture capital firms in accordance with a California Public Records Request.

The ruling mandates that as a publicly funded institution, the university is required to comply with the public records requests, including those for its investments, some of which were made with public money. Last year, Reuters America filed the suit against the UC system in response to its failure to comply with a public records request.

Information on each firm’s combined returns — reflecting all its investment activity — has been made available by the university, but the new ruling now requires the university provide more detailed information on the individual funds in which it specifically invests.

“It’s ultimately all state money from the taxpayers, subject to state law,” said Karl Olson, the attorney who filed the suit. “I think that it’s kind of strange to take the attitude of ‘we’re so lucky to give money to these venture capital funds.’ I think venture capital funds are lucky to get taxpayer money.”

According to The San Jose Mercury News, the UC system has invested a total of $7 million from its general endowment and $52 million from its retirement savings program with venture capital firms Sequoia Capital and Kleiner Perkins Caufield & Byers.

Both invest venture capital — funds that are invested in startup companies — that have the potential to give off high returns but at the risk of high losses. Venture capital invested in successful Silicon Valley startups like Facebook has paid off handsomely, while investments in unsuccessful startups are wholly lost.

The UC Office of the President, as well as both venture capital firms, declined to comment.

According to Joe Simitian — a former state senator who sponsored a law in 2005 clarifying the disclosure of public investments — the UC system opposed the disclosure of the investment information on the grounds that it would harm the university’s ability to invest in profitable venture portfolios amid declining state support.

“We want California and the UC system to be able to use high-yield investments — we don’t want that option to be unnecessarily limited,” Simitian said. “Ultimately, I took the bill on with the understanding, as did CalPERS and the UC, that I was willing to provide protections for what was legitimately proprietary info as long as we were clear that this was generally required.”

In 2003, the university lost a similar case when the Mercury News sued it for similar information on its venture capital investments at that time. Monday’s decision ruled that the university did not comply with the requirements outlined in Simitian’s statute.

The UC system will not need to comply with the ruling until the deadline for an appeal on March 11.

Jacob Brown is the lead higher education reporter. Contact him at [email protected]