US Pacific-Based Investors Targeting Venture Capital Funds – October 2013

by Firakh Patel

  • 29 Oct 2013
  • PE

Preqin’s Investor Intelligence tracks 5,247 LPs in the private equity universe. Of these investors, 426 LPs are based in the Pacific region of the US, that includes California, Washington, Oregon, Alaska and Hawaii, and have over $5.1tn in aggregate assets under management. Over half of these investors (53%) based on the west coast have an appetite for, or have previously committed to, buyout funds, and 42% have a preference for or have invested in growth funds. However, venture capital funds seem to be the most prominent investment opportunity pursued, with over 65% of Pacific-based LPs having either previously invested in venture capital funds or stated a preference for these vehicles.

The largest investor pool based in the Pacific region with an appetite for venture capital funds are foundations, accounting for 25% of all investors in terms of numbers. The second most prevalent investor are endowment plans at 16%, followed by public pension funds (10%), private sector pension funds (9%) and wealth managers (9%). Pacific-based LPs with an appetite for venture capital (excluding private equity fund of funds managers which typically have 100% allocated to private equity) are on average slightly above their target allocations to private equity, which stands at 13.2% of total assets, compared with an average current allocation to the asset class of 13.3% of total assets.

The majority of Pacific-based LPs targeting venture capital-focused vehicles are located in California; the state accounts for 79% of LPs in the region. Washington accounts for 11%, and Oregon, 7%. The remaining 4% of LPs that have an interest in venture vehicles is split between Alaska and Hawaii, at 2% each.

Among the investors actively investing in venture capital funds, San Francisco City & County Employees' Retirement System (SFERS) is but one example. The public pension fund recently made commitments of $25mn each to DCM Ventures China Fund and OrbiMed Private Investments. Venture capital vehicles continue to provide LPs in the Pacific region with opportunities to diversify to their investment portfolios.

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