In the opaque and secretive world of venture capital, performance can be hard to gauge. Funds often keep their returns close to the chest—only disclosing them to their own investors (limited partners, or LPs) and making it difficult to compare performance from manager to manager without being invested in every fund. PitchBook, a widely-used industry resource on private markets data, wants to capitalize on making it a little easier.
PitchBook just released a set of new tools focused around manager scores, which rank fund managers based on factors including performance, a capital call score (the pace at which they call down funds from their LPs), and distributions (how often fund managers, in turn, return capital to their limited partners). Limited partners “don't have a lot of quantitative models that help them analyze where their risk parameters” really are, Nizar Tarhuni, vice president of institutional research and editorial at PitchBook, told me. “[It's] a lot of work for small foundations and endowments.” That’s particularly tricky at a time when LPs are being more judicious with their cash as exits—like public listings or acquisitions that return money to LPs—are harder to come by.
According to PitchBook’s manager score rankings, Union Square Ventures, the New York-based VC firm cofounded by Fred Wilson, took two of the top three rankings (with their late stage fund strategy and their early-stage venture strategy ranking number one and number three, respectively). Emergence Capital Partners Fund ranked second, and IA Venture Strategies Fund I ranked fourth. The three firms did not respond to Fortune’s request for comment by press time.
PitchBook’s founder and CEO John Gabbert says they pull data from a variety of sources, including filings, press releases, disclosures, FOIA requests, and even from LPs and fund managers (GPs) themselves. Gabbert and Tarhuni say they hope the new tools will enable LPs to be better equipped to make decisions about where to put their money. Using historical cash flow data, “We have the ability to look at a fund and say, 'Listen, this is how fast they're deploying capital, here's how fast they're returning it.' And we can score that on a relative basis relative to other firms in that fund family,” Tarhuni says.
Notably, the new offerings fit into what I sense is a bit of a shift for PitchBook itself: The company seems eager to move past being largely known as a go-to place for all private deals, and to become more of a Morningstar-type resource for the decision makers—those folks with the serious money (Morningstar, which focuses on public markets, acquired PitchBook in 2016).
“I think many people in the marketplace view PitchBook as a deal database,” Gabbert told me. But this is “another step on our strategic roadmap to better equip LPs [and] capital allocators,” he says. Gabbert said that PitchBook has had a “50%-plus” compound annual growth rate over the last 10 years. “We think that this LP market is another big one for us to continue that growth rate,” he said, adding that they are “working on better communicating the types of solutions we have for asset managers.”
The CEO told me he also hopes PitchBook’s offerings will provide more transparency for the industry—in lieu of regulations from the Securities and Exchange Commission. Of course, transparency isn’t free: “We're still in the for-profit mode,” he said.
See you tomorrow,
Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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