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by technotony
3596 days ago
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It sounds like the problem isn't venture capital returns as a whole, but that Calpers can't get into the best funds for structural reasons related to the need to publicly disclose fund returns. Not surprising it underperforms if it can't get into the best funds. This data point isn't therefore very valuable for assessing Venture Capital returns as a whole which is what the headline implies. |
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> Calpers, which manages about $303 billion, has pared back investments in VC funds to represent 5 percent of its private-equity portfolio. Calpers has been working toward reducing its VC assets to 1 percent of its total because it’s been rejected by many top firms it wants to invest in. In 2012 when VC holdings were 7 percent of the portfolio, a Calpers executive said VC firms often prefer to keep out investors that are required by law to publicly disclose details about fund performance.
If you are scared about your fund performance being public, its likely the opposite of your conclusion. Funds with above market performance tout it publicly and loudly precisely because it brings in more money for them to manage.
Similarly, Calpers looked into them based on the fact they were "top firms" however without verifiable returns that can be discussed publicly...no one (even Calpers) can be certain these are in fact "top firms" in terms of actual return for the institutional investor.
YCombinator and many VCs make investments that are public knowledge in startups and these reports are circulated in the media. There is no competitive advantage to be found in keeping investments secret long after the fact, unless you might scare off potential customers who believe you are a "top firm" when from a RoI standpoint you are not.
Markets need to be transparent and competitive to function fairly for everyone.
People that oppose that always are looking to screw you.