The Canada Pension Plan Investment Board, which months ago opened an office in San Francisco, is already investing in local top-tier funds as part of its newly minted venture capital program.
CPPIB, Canada’s largest pension fund with net assets of C$410 billion ($309 billion), has so far made commitments to three Silicon Valley managers, Delaney Brown, head of private equity funds, tells Venture Capital Journal.
Brown, who declined to identify the fund managers, adds that CPPIB has met with a “very favorable market reception” to the 2019 rollout of its VC strategy.
The fresh commitments follow others recently disclosed by CPPIB. They include a $50 million investment in the $350 million Fund II of AI-focused VC firm Radical Ventures, made early last year. CPPIB also in late 2018 put C$70 million to work in the C$300 million Northleaf Venture Catalyst Fund II, a fund of funds managed by Northleaf Capital Partners.
Taken together, the activity marks a swift ramping up of CPPIB’s strategy, which aims to deploy an initial $1 billion to funds in North America and Europe. The San Francisco presence is key, as it is intended to help the pension fund source investment opportunities and deepen relationships in the world’s leading innovation hub.
Brown played a major role in the VC initiative’s early development and implementation. He tells VCJ the goal is to concentrate capital in a select number of top-tier franchises able to deliver outperformance and give CPPIB diversification as well as exposure to top tech deals, startups and sectors.
CPPIB will also consider making commitments to several emerging managers with first- or second-time fund offerings, Brown says.
In choosing fund partners, the main focus will be on sectors where CPPIB has built a track record, such as enterprise software and other tech. Fund investments will generally range from C$10 million to C$100 million across early-stage and growth-stage vehicles.
VC’s Canadian pension power
CPPIB is among several large Canadian pension funds that are starting up or expanding VC programs.
The others include the C$201 billion Ontario Teachers’ Pension Plan, which earlier this year unveiled its Teachers’ Innovation Platform to make late-stage VC and growth equity investments in tech companies. TIP closed its first deal in June, investing in Elon Musk’s space launch provider SpaceX.
The C$327 billion Caisse de dépôt et placement du Québec and C$97 billion Ontario Municipal Employees Retirement System, which have longer histories in the market, recently stepped up their VC activity.
Similar to CPPIB, OMERS Ventures this year opened an office in Silicon Valley, headed by Michael Yang, formerly of Comcast Ventures. The move, part of OMERS Ventures’ plan to establish a global platform, was several months later followed by creation of a new London office and a $342 million fund for investing in leading European tech hubs.