Analysts say this is likely more of a one-off than a sign that LP interest in venture is waning.
The Los Angeles County Employees Retirement Association (LACERA) voted to decrease its allocation range to venture capital at a March 13 meeting.
The board of investments voted to decrease its allocation range to venture capital and growth equity from between 15% and 30% of the pension system’s private equity portfolio, to between 5% and 25%. LACERA’s venture portfolio is currently 10.8% of the PE portfolio.
Despite the success of the venture subset, with a TVPI of 2.08x at the end of 2023, the highest among the private equity portfolio’s sub strategies, the organization cited market conditions for the change.
The top-performing funds in the private equity portfolio were venture funds, signaling a strong track record in venture investments conducted by LACERA.
Investment officer Didier Acevedo explained that the adjustment aimed to provide more flexibility and dynamism in the pension’s investment strategy, as it was underallocated within its existing range.
Experts believe the move is more of an isolated incident rather than a trend in LP interest decline in venture investments.
Despite market fluctuations, LP interest in venture is generally on the rise. Factors like smaller fund targets and a focus on existing managers are influencing LP decisions in the current economic climate.
Overall, LPs are expected to maintain their venture allocations this year, with minimal changes anticipated.
