Hey all. Lizette here. Everyone expects the recent rush of tech IPOs to create a tribe of nouveau riche, jack up home prices, and bankroll the next wave of startups. Those billion-dollar payouts are also enriching some of America's oldest private foundations. Seven foundations tied to wealthy family names including Rockefeller, Mellon and Packard are major investors in Benchmark, the venture capital firm that bet early on Uber Technologies Inc. And despite Uber's initial public market belly flop, Benchmark and its investors are still getting one of the fattest paydays in VC history.
Who isn't cashing in? Retired employees from the state, school and public agencies in California. Calpers, the nation's largest pension fund that manages those groups' retirement money, has been effectively shut out of the best venture deals for nearly a decade because it committed the sin of transparency. Calpers published venture fund returns along with the performance of equity, fixed-income and other assets the pension giant held. So top firms, including Sequoia, Benchmark and Accel, shut out Calpers because they didn't want their performance numbers exposed. This left Calpers with lesser venture firms, and the pension fund at one time vowed to exit the asset class.
But the VC business has changed dramatically in recent years. It used to revolve around relatively small investments. Now, SoftBank's Vision Fund and other megafunds have made $100 million startup funding rounds a regular event. That's created a new opportunity for major market players like Calpers to write big checks -- not to VC funds, but directly to startups.
Calpers recently found that private equity was its highest performing asset class over the past 20 years, reinforcing the need for a new approach to venture capital. The pension giant plans to pour as much as $13 billion a year into private companies. There's a traditional buyout-style fund and another vehicle that makes later-stage bets on startups in technology, life sciences and healthcare. This week, Calpers appointed Greg Ruiz, formerly of Altamont Capital Partners and Goldman Sachs, to lead the new program.
So the very venture firms that previously shut out Calpers may now find themselves competing with Ruiz's team to get into the hottest startups. And if the newest venture investor in California has some luck, it may be spreading some IPO riches to the state's teachers and other public-sector workers.-- Lizette Chapman
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