LAFPP pumps nearly $250m into venture in 2019

The Los Angeles Fire and Police Pensions dove headfirst into venture last year and ran laps around its 2018 commitment total.

The Los Angeles Fire and Police Pensions invested more than $220 million into venture and growth vehicles during 2019, according to board meeting documents. All told, the pension committed to 20 funds in 2019, across stages, through a mix of new and existing manager relationships.

The majority of the commitments last year, eight, went to early-stage and seed-stage investors. Six commitments targeted stage-agnostic funds. Four of the funds focus on Series B and Series C rounds and two look at late-stage companies and growth opportunities.

The California pension system invested three times as much capital into the asset class in 2019 compared with 2018, when it put $67.5 million to work.

A banner year

While 2018 was a particularly slow year for venture activity for the pension fund, 2019 also tops every year of the last five years. The second most active year was 2015 when $120 million was invested, followed by 2017 with $112.5 million and 2016 with $87.5 million.

In 2019, the pension invested into 13 pre-existing manager relationships including a $15 million commitment to Oak HC/FT’s third vintage, a $20 million commitment to New Enterprise Associates’ 17th flagship vehicle and a $9.5 million allocation to Defy’s sophomore offering.

The NEA fund is still reportedly in the market and is targeted at $3.6 billion, the firm’s largest fund to date.

The pension invested $158 million into its re-up commitments, which made up 71 percent of its activity in the asset class. The remaining 29 percent, $35 million, went into new relationships, all of which were with emerging managers.

Some of these first-time commitments include $5 million into Equal Ventures 1, which is targeting $40 million to invest in tech companies, and $7.5 million into the second fund of Fika Ventures, a Los Angeles fund which closed on more than $76 million from 53 investors in May 2019.

The firm also invested in newer vintages from existing emerging manager relationships like Ulu Ventures, Centana Growth Partners and Threshold Ventures.

LAFPP doubled the amount of capital that went to new relationships in 2019 compared with 2018. In 2018 the firm invested $17.5 million into three emerging managers, including Aldrich Capital, Reach Capital and Innovation Endeavors.

Asset allocations

The fund targets a 12 percent allocation to private equity and a 15-to-35 percent venture and growth allocation within that. These ranges were set in 2016 and the pension plans to revisit and potentially revise these mandates later this year.

As of the end of the second quarter of 2019, the pension had more than $1.2 billion invested in venture, which is about 4 percent of the overall portfolio.

The strategy collected a return multiple of 1.59x, as of the end of the second quarter 2019. Venture was producing a net IRR of 9.7 percent as of March 31, 2019.

The pension did not respond to multiple requests for comment.

The Los Angeles Fire and Police Pensions were founded in 1899 and serve more than 26,500 active and retired members. The pension currently has more than $23 billion in assets under management.