You can always count on Hunch founder Chris Dixon for interesting Tweets. He just sent out this one:
turns out patent trolling might not pay. Intellectual Ventures has negative 78% return.http://bit.ly/bSfamC
The link is a PDf download of a document from the University of Texas Management Company listing all of its private investments in venture funds and private equity funds, along with their internal rates of return (IRR). One of the worst performers is Intellectual Ventures, the patent portfolio fund started by Nathan Myrhvold that has a reputation for patent extortion. One of its funds, the Invention Development Fund I, has a negative 73 percent IRR (Dixon mistakenly thought it was negative 78 percent, but close enough). Another fund, the Invention Investment Fund II, has a negative 10 percent return. The two funds combined are delivering a negative 36.66 percent IRR for the University of Texas.
These figures only show the returns to the University of Texas, which may have invested at the wrong time. They are from inception to May 31, 2010. The University of Texas invested a total of $28 million in those two funds, and may still get a return on its investment, but this glimpse into how Intellectual Ventures is doing for one of its limited partners suggests that at least those two funds are having trouble.
The University of Texas is doing better with some of its more traditional venture funds. For instance, its average return across seven Austin Venture funds is 28.76 percent, with Austin Ventures IV up 73.14 percent. According to the document, Union Square Ventures 2004 fund is up 48.37 percent. But there are some lackluster VC returns too. For instance, the IRR on Union Square Ventures 2008 so far is negative 15.75 percent and Integral Capital Partners is showing a lackluster 1.56 percent IRR. Again these numbers are admittedly only snapshot, but they are informative nonetheless.
The document is embedded below.
Intellectual Ventures is a private company founded in 2000 to invest in “pure invention.” Its goal is to develop a large patent portfolio rather than to actually develop new systems. Its employees are predominantly patent attorneys, physicists, engineers and biotechnologists. They also have hired prominent scientists to perform invention including Robert Langer of MIT, Leroy Hood of the Institute for Systems Biology, Ed Harlow of Harvard Medical School, Danny Hillis of Applied Minds, and Sir John Pendry of Imperial...
Austin Ventures (“AV”) has worked with talented entrepreneurs to build valuable companies for over 25 years. With $3.9 billion under management, AV is the most active venture capital and growth equity firm in Texas and one of the most established in the nation. With an investment focus on business services and supply chain, financial services, new media, Internet, and information services, AV invests at all stages of company development, from $100,000 in “planned experiments” in early-stage ideas to $100+...
“Union Square Ventures is an early stage venture capital firm based in New York City. We invest in young companies that use information technology in innovative ways to create high growth business opportunities in the Media, Marketing, Financial Services, Telecommunications, and Healthcare industries. Our venture capital firm was conceived as a place where a small number of very experienced investment professionals, working collaboratively from a single office, could build a portfolio of promising startup companies and then put our experience...
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