Wellcome Trust is not letting the covid-19 pandemic put a chill on its investing. The $33 billion foundation today re-upped with a healthcare venture capital fund, and it is well-positioned for future investments, says principal Geoffrey Love.
“We’re not doing anything terribly dramatic, but we continue to look for new opportunities,” says Love, who is in charge of WT’s venture capital portfolio.
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The UK-based foundation has been anticipating an overall market downturn for a few years, and has planned accordingly, Love says. “We have a lot in cash, which is a great place to be,” he says. About 4 percent of its portfolio (or $1.3 billion) was in cash and bonds as of last September.
It is unlikely that WT will commit to new VC relationships because, like other LPs, it cannot do in-person due diligence at present. “I think anyone raising an entirely new fund is going to struggle,” Love says. “We’re focused almost exclusively on existing relationships.”
The venture firm that won a new commitment from WT has had a relationship with the LP for more than a decade. WT began due diligence on the new fund in December. In addition to a solid track record, the healthcare investor has “shown through difficult market cycles that they invest capital sensibly,” Love says.
Although it is largely avoiding new relationships unless they are “truly exceptional,” WT will consider buying stakes on the secondary market. It has its eye out for secondary opportunities “for funds we’ve wanted to get into for a long time,” Love says. It has used that strategy in the past, but it has not seen any opportunities to do so in the current environment.
Based in London, Wellcome Trust is the world’s fourth largest charitable foundation, with an investment portfolio valued at £26.8 billion ($33.1 billion) as of September 30, 2019. About 28 percent (or $9.3 billion) of the portfolio is dedicated to private equity, which includes venture capital funds.
The foundation has not seen the need to mark down any of its private markets and it does not expect to have to do so for at least one or two quarters, “unless something fundamental changes,” Love says.
Further reading: Profile of Wellcome Trust