Public filings of the California Public Employees' Retirement System (CalPERS) seen by Insider show that many of the firm's investments in VC funds over the past two decades resulted in dismal returns.
Between 2000 and 2020, the firm's VC investments yielded 0.49% returns.
- CalPERS is the largest public pension plan in the U.S., managing over $440B in assets for over 1.5 million California-based employees and retirees.
- The firm invested $75M, $75M, and $25M in Carlyle Group, NEA, and DCM's venture funds in the early 2000s. The latter two earned just 2.7% and 1.9% IRR.
- CalPERS' $260M investment in Khosla Ventures' early and seed stage vehicles in 2009 yielded a return of 11.8% and 6.9% IRR, respectively, both below benchmark figures of 14.7% that year.
- Due to the dismal returns from VC funds, then-chief investment officer Joe Dear slashed the firm's VC investments.
- The firm returned to VC investing in 2020, with an aim to deploy $1B into the asset class every year.
- In 2022, CalPERS committed $300M and $400M to Tiger Global and Lightspeed Ventures' funds.
- Per Columbia Business School professor Leonard Sherman, limited partners typically expect a return of 25% to 30% IRR from early-stage funds.
