Among the tables, charts and bottom-line numbers in venture capital firm Grotech Capital Group's quarterly report to its investors is what Managing General Partner Frank A. Adams calls his "heart of hearts," a narrative of his gut feelings about companies that Grotech of Timonium has invested in. The essay includes Adams's candid opinions about the companies' top executives and their chance of succeeding.

The chief executive of a public company might worry about putting anything so sensitive down on paper, much less distributing it to investors. Like many things in the venture capital world, though, Adams's essay is supposed to be secret. "I'd hate to see that get out," says Adams. "It would be damaging."

So far, that hasn't been a problem, but there is a new and growing challenge to the closeted culture of venture capital. Recent court rulings have forced public institutions that invest in venture capital funds to disclose information about the funds through the Freedom of Information Act. Public investors, such as state pension funds, need to turn over the information, while private groups such as family endowments do not. This week, the Massachusetts state pension fund for the first time disclosed individual returns for the 103 venture capital funds it invested in from 1986 to 1998 in response to various FOIA requests.

These requests have become the bane of many venture capitalists' existence, a constant concern for VC firms that don't have to comply with corporate governance rules for public financial companies. It's called the "transparency" problem in the inner circles. Some venture capital firms are now skirting the problem entirely by turning down any public money.

Very little information is put out officially by venture capital firms or compiled for comparison. And the venture capital community is such a clubby world that even competitors consider it improper to disclose data about each other to outsiders. Of course, information does flow. But even those who claim to be most connected and knowledgeable admit their information comes mostly from cocktail party gossip about whose investments are winners or losers and which funds are prospering or in trouble.

"You know bits and pieces from conversations, or you think you know, " says Jim Fleming, partner with Columbia Capital in Alexandria. "It's a small world and we all talk, but it's more of a sense."

Mark O'Hare, a financial analyst based in London, zeroed in on the lack of concrete information and began a campaign to gather more publicly available data than anyone else had found. The result is "The 2004 Private Equity Performance Monitor," a glossy book of charts that details fund returns, investors and other information on 1,722 funds at 522 firms around the world with a total value of $820 billion.

"It's time for a change," O'Hare says of the lack of solid information about venture capital funds and their performance. "Everybody claims to be in the top quartile." O'Hare says the change is being driven by potential investors who want more complete information when deciding where to put their money. He charges $1,200 for the book, which he plans to publish annually, and also has a Web site for subscribers that is updated regularly.

O'Hare makes one big concession: He wants to make it clear to venture capitalists that he's not interested in publishing information about the individual companies in which they invest. That's what venture capitalists say is their biggest fear.

Still, the book's barrage of numbers makes local venture capitalists, about a dozen of whom are listed in the book, very uncomfortable. "You can't make decisions on a snapshot in time in this business," says John Higginbotham, chairman of Reston venture capital firm SpaceVest.

The numbers on SpaceVest, for example, are not great for the initial fund it launched in 1995. It's listed as having a negative 14.8 percent rate of return as of June 2003. But SpaceVest's second fund, which began investing in 1999, boasts a return rate of 59 percent as of March 2003. The numbers are put into perspective by listing the "benchmark" rate of return, meaning the average of other venture funds that made their first investment that year in the United States: 63.6 percent for 1995 and negative 23.3 percent for 1999. So SpaceVest's first fund did even worse and the second fund did even better, compared with other funds. Higginbotham confirms those numbers are right for the period stated, but claims the first fund is now breaking even and the second one has risen to an 80 percent rate of return.

Peter Barris, Reston-based managing general partner of the largest venture capital firm in the area, New Enterprise Associates of Baltimore, which is listed in O'Hare's book as one of the world's best performers, says this is a difficult subject. "Arguing against transparency is like arguing against motherhood," he says. But the issue is damaging to his industry, Barris says, because it is forcing venture capitalists to do business differently. "It is called private equity," he says. The Carlyle Group in Washington was the only other local firm in the book's listing of top global performers.

Barris cautions against comparing returns from different firms because some value companies differently from others. "When you just disclose these numbers you don't know what's under the cover," Barris says. "It's dangerous information in the wrong hands."

In fact, the numbers were something most venture capitalists refused to talk about. Bill Dixon, a spokesman for Friedman, Billings, Ramsey Group of Arlington, said the company does not disclose venture capital fund performance numbers. Columbia Capital's Fleming says the numbers in the Private Equity Performance Monitor are "not meaningful."

Grotech's Adams says it's part of his agreement with investors to not disclose financials. "We try to establish a relationship of trust and we say, 'By the way, we'll keep it to ourselves,' " Adams says.

Venture capitalists are trying some new ways of hanging on to secrecy. Some of Grotech's investors, worried that the firm won't be able to protect the information, have started asking that their names be taken off documents that could eventually reach the public, Adams said. They don't want the world to know their personal investment strategies or the results. Adams has complied, substituting anonymous numbers for names.

Higginbotham also has begun changing practices at SpaceVest. Now, even though investors sign confidentiality agreements, they are given only summaries of individual company performance rather than more specific breakdowns of financials or information on proprietary research and development. Fleming says Columbia Capital hasn't yet changed anything formally, but its partners are being more careful about what they disclose to their investors. "Everybody in the industry is thinking about this," he says. "It's a work in progress."

Shannon Henry writes about Washington's technology culture every other Thursday. Her e-mail address is