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MassPRIM may give its CIO more authority to seize VC opportunities

The backer of Union Square Ventures is looking to give CIO Michael Trotsky more flexibility for VC fund investments.

A detailed map of Massachusetts state with cities, roads, major rivers, and lakes. Includes neighboring states and surrounding water.

Massachusetts Pension Reserves Investment Management Board may allow its chief investment officer, Michael Trotsky, to make decisions on certain venture capital commitments without first requiring investment committee and full board approval, as reported by affiliate title Buyouts.

LPs have endured a frantic pace of fundraising, leading many to consider ways to maintain flexibility when presented with investment opportunities. The proposal from MassPRIM’s investment team reflects this through its proposed policy that would speed up the commitment process for venture capital funds.

The proposed policy limits commitments without board approval to $75 million to any single fund. New venture capital commitments also may not exceed 20 percent of the annual commitment made to private equity, according to the presentation.

The proposed policy does not extend to venture capital co-investments.

According to a presentation made before the MassPRIM Investment Committee on Tuesday, LPs have had difficulty accessing desirable venture capital fund managers due to their smaller fund sizes.

A quicker timeline for venture capital fundraising also requires LPs to act quickly when presented with possible commitments, according to the presentation.

“Venture capital is a very attractive asset class and it’s difficult for small teams like ours to manage,” said MassPRIM senior investment officer Helen Huang.

MassPRIM’s full board will vote on the proposed changes at a board meeting scheduled for next week.

Trotsky is MassPRIM’s executive director in addition to being its CIO. He has been with the pension system for about 22 years.

MassPRIM announced in December that it had eclipsed $100 billion in AUM for the first time. “With the latest valuation at the end of October, the PRIT Fund reached a record $101 billion, having more than doubled in size over the past 10 years,” it said in a statement. “The historic result follows the fund’s record-breaking performance in FY 2021, where the fund returned 29.5 percent and outperformed its benchmark by 8.9 percent, net of fees.”

MassPRIM is responsible for investing on behalf of the Massachusetts pension fund, which contains the assets of the Massachusetts Teachers’ and State Employees’ Retirement Systems as well as the assets of about 100 participating municipal and county retirement systems, according to its website.

It has a 35 percent allocation to alternative investments, including a 15 percent allocation to private equity, according to research by Venture Capital Journal.

Of the five commitments MassPRIM has made to vintage 2022 funds, two were to funds managed by Union Square Ventures. It committed $32 million to USV Opportunity 2022, a $350 million opportunity fund, and $22 million to USV 2022, Union Square’s $275 million flagship fund.

Additional reporting by Lawrence Aragon