CalPERS Has Lower Target Allocation to Venture Capital
Venture capital is a risky asset class and has left a sour taste in the mouths of many public pension funds after the 2000 bust. With that being said, several large Canadian public investors in the East are allocating small portions of assets to venture capital, even creating dedicated venture capital teams. The California Public Employees’ Retirement System (CalPERS) has grown cautious over the years investing in venture capital. At the end of last year, the CalPERS board set the target for venture capital at 1% of its alternative investment management (AIM) program. Currently, around 7% is represented by venture capital, so it will likely be years before the pension fund commits new capital to it.
Another hurdle is that the current venture industry is too small to absorb a large amount of money from CalPERS. For large public investors, $50-70 million is the minimum they would want to commit. In addition, public investors are looking to streamline and reduce their numerous relations with fund managers.
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