Investor Appetite and Recent LP Commitments to Venture Capital Funds – June 2014

by Katie Edwards

  • 10 Jun 2014
  • PE
  • VC

Preqin’s Investor Intelligence currently tracks over 5,300 LPs that are actively investing in the private equity asset class. The product shows that over half of these investors (59%) have expressed a preference for, or have previously committed to venture capital funds. This majority proportion is unsurprising given the prominence of the venture capital investment strategy, with private equity players across the world recognizing the lucrative opportunities to be found in early-stage, high-potential start-up companies. Further analysis using Preqin’s Future Fund Searches and Mandates tool reveals that 12% of the investors with an appetite for venture capital funds are actively seeking to commit to new venture capital vehicles within the next 12 months.

The investor type that makes up for the highest proportion of investors to show an interest in venture capital funds is foundations, accounting for 13% of the pool. Endowments and private sector pension funds each represent 12% of LPs interested in venture capital opportunities, followed by public pension funds (10%). Geographically, North America-based investors account for 56% of LPs that are attracted to investing in venture capital funds. These LPs are likely to be particularly drawn to the domestic venture capital market, which is buzzing with activity particularly stemming from the renowned Silicon Valley, and also with notable deals seen in the states of Massachusetts and New York. Western Europe-based investors rank second, but have a significantly lower percentage rate of interest in the fund type (21%), followed by the Far East (5%).

University of Virginia Investment Management Company (UVIMCO) is among a myriad of investors that are looking to commit to new venture capital vehicles over the coming year. UVIMCO will look to target opportunities on a global scale, but has previously shown a particular preference for US-based funds. Los Angeles County Employees’ Retirement System is an example of an investor which has already made a commitment to a venture capital vehicle in 2014. It committed $100mn to GGV Capital V, which is targeting opportunities in the US and China. New York University Endowment has also made a commitment to a venture capital vehicle this year. The US-based endowment plan committed to Qiming Venture Partners IV, which focuses on investment opportunities in China. With a significant proportion of LPs looking to make commitments to venture capital funds going forward, it can be seen that many investors believe the fund type to be presenting attractive opportunities in the current financial climate.

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