CalPERS Increases Venture Capital Investment Despite Tech Turmoil

California’s giant public pension fund is looking to increase its exposure to venture capital in the coming months, despite a sluggish start-up market and the recent underperformance of the fund’s VC portfolio.

The California Public Employees Retirement System (CalPERS) manages nearly $457 billion in assets as of April 2023. Anton Orrich, the pension fund’s managing investment director for private equity, suggests that CalPERS is keen to tap into the domestic funding gap and become a top global company. Became a larger limited partner after a tough year in the technology private market.

After a record 2021, venture-backed firm exit activity plummeted by about 90% last year, according to the National Venture Capital Association. IPO Market Frozen and Craterization of tech stocks. Venture investment, while still at a historically high level, is down 30% year-on-year.

and presentation Orrich, who plans to fund Calpers’ investment committee, which can now be viewed on the fund’s website, said the investment director said the pension fund is “a preferred solution at a time when some LPs are withdrawing their commitments.” It should be a provider,” he said.

Orrich said Calpers’ private-equity investment strategy was “inconsistent.” He described it as a “lost decade” because the company missed out on a long bull market and vintage years that would provide “strong investment returns.”

From 2000 to 2020, CalPERS underperformed the venture market with an annual profit margin of 0.49%, according to a PitchBook report.

The venture represents just 1% of CalPERS’ $55 billion private equity portfolio, representing a net asset value of approximately $758 million. Last year, CalPERS’ PE portfolio returned -4.7%, while CalPERS’ venture investment performance was -24.8%.

Pension fund investments are skewed toward so-called “real assets” such as public markets and real estate.

But just because CalPERS wants to ramp up its venture world activity doesn’t mean the funding will be welcomed by all participants.

Unlike many large, privately held LPs who can keep their relationships secret, CalPERS must make their investments public and their track record public. For example, in December 2022, CalPERS invested his $600 million into two of his TPG venture funds.

Still, Orrich said the funding environment will give CalPERS an advantage in finding opportunities “with historically hard-to-reach executives.”

clock: Pension fund venture investment