Q&A: Denise Nappier

Q: What’s the most important thing for venture capitalists (as distinct from other private equity professionals) to know about Connecticut as an institutional investor?

A: As early as 1987, when the venture capital segment was a fledgling industry, Connecticut Retirement Plans and Trust Funds [CRPTF] was among the first pension plans to commit capital to the space. The Connecticut Treasury chose to pursue its venture capital investment through a fund of funds vehicle, which provides an extension of our in-house capabilities.

Our goal with this strategy is to create a prudent investment structure that could enhance our exposure to small- and mid-size funds, especially some of the better performing funds that have historically been closed to large public plan sponsors. The Treasurer’s Office has a chief investment officer and in-house investment officer who oversee the private equity program as part of the $25 billion CRPTF, and retains Franklin Park as its outside investment consultant.

CRPTF accesses the venture capital market through a number of investment vehicles, including venture-capital focused separate account fund programs and co-mingled funds of funds, as well as direct fund commitments.

As of Dec. 31, 2006, this portfolio of venture capital funds has been our strongest performing vehicle, generating IRR and times money earned of 20.6 percent and 2.6x, respectively.”

Denise Nappier, Treasurer, State of Connecticut

We are currently in the process of creating a clean technology fund of funds program, as well as three custom funds of funds through the pension fund’s Connecticut Horizon program, which will target Connecticut-based, minority-led, women-led and emerging managers. Both of the separate accounts will include commitments to venture capital funds, including early and late stage investment strategies.

Q: Is the venture capital asset class as important to Connecticut as it has been in the past?

A: Venture capital remains a significant component of Connecticut Retirement Plans and Trust Funds’ private equity program. Approximately 30% of CRPTF’s private equity assets are allocated to venture capital.

We are in this market to stay, as part of a diverse allocation to the private equity market. We are well aware that successful venture capital investments make for wonderful stories when investor returns are robust and collateral benefits contribute to the overall strength and growth of American business and the vibrancy of our economy.

We are creating a clean technology funds of funds program, as well as three custom funds of funds through the pension fund’s Connecticut Horizon program, which will target Connecticut-based, minority-led, women-led and emerging managers.”

Denise Nappier, Treasurer, State of Connecticut

Q: Are you happy or unhappy with the returns you’ve seen from venture capital?

A: As of Dec. 31, 2006, this portfolio of venture capital funds has been our strongest performing vehicle, generating IRR and times money earned of 20.6% and 2.6x, respectively.

Connecticut’s pension fund will continue to seek venture capital fund investment opportunitities that generate premium investment returns from a risk-adjusted basis, and are responsible actors.