New Math in VC Allocations

There is a story out on VentureWire about how Calstrs (the California State Teachers’ Retirement System) is proposing a fairly dramatic cut in its portfolio allocation to venture capital, from 15% to 5%.

Dire stuff, right? Not necessarily. While in theory it represents $17.6-billion less of Calstrs’ $176-billion in assets available to fund venture firms, the reality is Calstrs was never able to find enough fund to which to allocate 15% of its assets to VC in the first place. Better yet, the 15% target, which was never hit, is also well under Calstrs’ former 25% asset allocation, which (guess what?) was also never hit, and so reduced to 15% in 2005.

Net-net: Calstrs could conceivably cut its VC allocation from 15% to 5%, and still increase the amount of money it puts into venture firms. What a nutty business this is.

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  2. The Venture Capital Capital Calamity Thing
  3. Top Ten Limited Partner (LP) Lies
  4. Quattrone and IPO allocations — Wrong!
  5. IPO Market is Squishy

Comments

  1. Don Jones says:

    But what does this “bellweather” institution’s action of cutting their allocation by 2/3 imply for other similar institutions, and the impact on venture capital funds…?