Lightspeed vc12/14/2023 "Despite the market conditions and their impact on our returns, we're focused on long-term performance and our members can be confident that their retirement is safe and secure," CalPERS CEO Marcie Frost said last year in a statement.As we watch our government lift our economy out of a recession simply by printing more money, it's reasonable to ask, how much will fundamentals drive our economy moving forward? Tiger has been infamous for its rapid-fire deployment, and most of CalPERS commitment has already been spent, an unusual pace in an industry where funds are usually deployed over 10 years.Īlso in 2022, CalPERS also committed $400 million to four funds managed by Lightspeed Ventures.ĬalPERS recorded its first loss last year since the Great Recession, announcing a -6.1% net return on investments. Last year, CalPERS committed $300 million to Tiger Global, the troubled hedge fund that was hit by tens of billions in losses. CalPERS declined to make Lee available for an interview. In 2020, CalPERS hired a new head of venture capital, Ben Lee, and tasked him with deploying $1 billion a year. In recent years, CalPERS has returned to VC investing at a tumultuous time, getting into the market just before last year's sharp downturn. Venture has been, by far, the worst asset class for CalPERS, returning an anemic 0.49% from 2000 to 2020, according to a 2020 presentation given by its investment committee. It did not help that CalPERS was locked out of top firms like Sequoia, Benchmark, and Accel because they did not want their performances publicly disclosed in filings.Īt the same time, other large money managers, like those behind the endowments of Yale and Princeton, increased their venture exposure, which yielded lucrative results. The timing was terrible, as CalPERS missed out on the greatest tech bull market in history. In 2012, Joe Dear, then CalPERS's chief investment officer, said he would no longer invest in venture because of the bad performance. Those figures were both below the 14.7% benchmark for that year, according to Cambridge.ĬalPERS, the Carlyle Group, NEA, DCM, and Khosla declined to comment.īecause venture is such a risky asset class, institutional investors generally expect 25% to 30% IRR for early-stage funds, Leonard Sherman, a professor at Columbia Business School, said. Its $260 million investment in two Khosla Ventures funds in 2009 yielded an IRR of 11.8% for the early-to-midstage fund and 6.9% for the seed-stage fund. But CalPERS's VC performance was especially bad and hardly improved when the market rebounded. To be fair, the early aughts, amid the fallout from the tech bubble bursting, were a tough time to be in venture, with a -0.01% IRR benchmark in 2000 and a 3.9% IRR in 2001, according to Cambridge Associates. A $25 million investment in DCM's 2000 fund had a 1.9% IRR. That same year, the $75 million it invested in a fund from the VC giant New Enterprise Associates yielded a dismal internal rate of return of 2.7%. The CalPERS fund's $75 million bet in 2001 on a venture fund managed by the Carlyle Group lost money. Unlike many other financial institutions, VC funds are not required to show their return on investment in startups. The organization's public filings for its investments with VC firms provide a rare look at what is normally a closely guarded secret in the highly opaque world of venture. In recent years, CalPERS has returned to venture investing, but the fund's timing isn't great.Īs the influential $440 billion California Public Employees' Retirement System shifts more of its portfolio to venture investing, many of its previous investments in venture-capital funds have been plagued by poor performance, according to an analysis of public filings reviewed by Insider.ĬalPERS is the US's largest public pension plan, managing the retirement accounts of 1.5 million California employees and retirees.CalPERS' CIO in 2012 said he would stop venture investing because the performance was so bad.Many of CalPERS's venture investments from the early aughts performed badly.
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