The San Francisco Employees’ Retirement System (SFERS) committed over $100 million to venture in Q1 and its CIO thinks the portfolio is in a good position amidst the market turmoil.
The California pension committed to three venture vehicles last quarter. SFERS committed $30 million to Canaan XII, $41 million to Battery Ventures XIII and $34 million to Battery Ventures XIII Side Fund.
Canaan XII launched in late-April, according to a regulatory filing. Canaan focuses on early-stage investing in tech and life sciences worldwide. The pair of Battery Ventures funds closed on $2 billion in February from more than 100 LPs and will also invest in various tech sectors across stages.
The pension has existing relationships with the two venture firms. SFERS committed $30 million to Canaan XI, which closed on $800 million in 2017. The firm also committed $23.3 million to Battery Ventures XII and $21.7 million to its side fund; both closed on $1.25 billion in 2018.
CIO William Corker wrote in his most recent report that he felt that the pension’s venture portfolio was “in a good position” in the wake of the covid-19 pandemic. He said that the organization’s emphasis on technology, healthcare and early-stage investments mainly sheltered its portfolio from the market sell-off in March.
He added that as the downturn continues to unfold, they will look into the attractive opportunities that arise at the later stages as valuations start to soften.
SF pension commits $1bn over five years
SFERS invested $250 million into venture last year. Some recent 2019 commitments include $40 million to Longitude Venture Partners IV and $100 million to two funds operated by Knightsbridge Advisers.
The pension focuses on US and global managers, especially those that invest in China, and it has steadily grown its venture portfolio over the last few years.
Altogether, the pension has invested more than $1 billion into the asset class since the beginning of 2016. Its most active year over the last five was 2018 when the pension invested $346 million to venture managers.
The pension has been a repeat backer of multiple venture flagship products from firms like Battery Ventures, Lightspeed Venture Partners and GGV Capital, among others.
SFERS targets an 18 percent allocation for its private equity portfolio, which was overweight at 21 percent at the end of 2019. Venture makes up about 37 percent of the more than $5 billion private equity bucket, or about $1.85 billion.
The venture portfolio grew 5 percent from the end of 2018 to the 2019. The venture portfolio made up 32 percent of private equity at the end of 2018.
The portfolio’s private equity strategy clocked a one-year return of 13.42 percent in 2019.
The San Francisco Employees’ Retirement System was founded in 1987 and currently serves more than 73,000 active and retired members. The organization has more than $27.4 billion in assets under management.