Although the Los Angeles Fire and Police Pension’s staff and consultants are eager to harvest liquidity from a swelling number of mature venture funds, the system is optimistic about a portfolio that’s showing outperformance compared to benchmarks and peer pensions.
That was the view expressed at its November 6 board meeting, when the $35.7 billlion pension system’s private equity consultant, Future Standard, highlighted that the IRR of the California pension’s venture funds came in twice as high as its MSCI private market benchmark across most vintage years. Venture Capital Journal listened to a live broadcast of that meeting.
Since inception, the system’s venture program has tallied an 11.4 percent IRR, which is just about double the MSCI benchmark’s 5.8 percent, according to the presentation. More recent vintages, isolating just post-2019 commitments, are showing even more outperformance at 12.2 percent versus the benchmark’s 3.5 percent.
Those investments sit in the system’s private equity sleeve, which is outperforming peer pensions, including Los Angeles City Employees’ Retirement System and Los Angeles County Employees Retirement Association, according to meeting materials.
Around 47 percent of the pension’s venture exposure is in what it categories as mature and maturing vintages, which was defined as commitments made earlier than 2019. LAFPP views that exposure as “well positioned for liquidity” in coming years.
Who’s who
Managers in the system’s VC portfolio include Acrew Capital, Base10 Partners, Canaan, Canvas Prime, Defy, Equal Ventures, Fika Ventures, Imaginary, Innovation Endeavors, Longitude Capital, Longitude Capital, New Enterprise Associates, Oak HC/FT, Pear, Polaris Partners, Renegade Partners, Spark Capital, Threshold Ventures, Ulu Ventures and Work-Bench, according to fundraising data from affiliate title Buyouts.
The pension deployed a hefty amount of capital in venture between 2020 and 2023, committing to 13 funds annually in each of those years. Its consultants alluded to a heightened interest in those vintages that was tied to resets of valuations in venture funds as well as the acceleration of technology adoption in the covid years.
Growth rates in the asset class settled after that and the system didn’t deploy nearly as much capital in the two years following, according to commentary at the meeting.
So far this year, LAFPP has made at least four commitments to venture capital funds, committing $30 million to The Oak HC/FT Partners VI, $15 million to Nava Ventures II, $15 million to Threshold Ventures V and $30 million to Imaginary Venture Capital Partners IV, Buyouts reports.
LAFPP is targeting a 25 percent allocation to venture capital in its private equity portfolio, with another 50 percent targeting buyout strategies and 25 percent reserved for special situations. Venture currently makes up 30 percent of the system’s private equity bucket.
The pension’s consultants told the board that there was potential to “catch the right managers at the right time” in venture and achieve higher, albeit less steady, returns compared with buyouts.
The consultants also conceded that it has been tough sledding for distributions across both buyouts and venture, but that an easing of interest rates, moderating inflation and accommodating credit markets signaled a coming rebound.
Picking up the pace
At its October 1 meeting, LAFPP said it will look to continue along a steady private equity pace that it has set itself over the last three years, while placing a greater emphasis on venture capital and special situations assets, as first reported by Buyouts.
The pension plans to target $800 million in commitments to private equity assets in 2026, in line with the previous three years of commitment pacing the pension set itself. The private equity pacing is exactly the same as it was for 2024 and 2025, but LAFPP signaled that it would aim to continue to grow its commitments to non-buyout strategies, especially venture capital and growth equity assets.
In 2024, LAFPP committed $75 million to venture capital and growth equity assets, compared with $530 million to buyout assets. Comparatively, the pension has already committed $140 million to venture capital and growth equity assets in 2025, with at least $30 million more scheduled to be approved.
Alfie Crooks contributed to this story