* CIO cites limited access to top funds
* Bottom of target range to venture now zero
* $1.3 billion invested in venture, growth capital
By Gregory Roth and Mark Boslet
NEW YORK, Nov. 15 (Reuters-BUYOUTS) - Limited access to top
venture funds continues to restrain the Washington State
Investment Board from investing in the asset class, according to
Gary Bruebaker, the board's chief investment officer.
The state's approach echoes that of the California Public
Employees' Retirement System, which earlier this year confirmed
plans to foreswear most venture capital investments. The pension
cited poor performance and the difficulty of getting enough
money into the best funds to make a difference to the overall
Washington State's Bruebaker, who oversees $84 billion in
assets, said he genuinely likes venture capital. But he finds
that top venture firms are reluctant to accept money from giant
pensions like his.
"Due to our size, we're never going to be able to get into
the best funds because they are not going to come to Washington,
sit in front of my private markets committee in an open meeting,
with the press in the back, and ask Washington for money," he
said in an interview.
The Washington board's main $62 billion pension fund lowered
the bottom end of its combined venture and growth capital
allocation target range to zero in 2009. The top end of the
range was cut to 10 percent. Prior to 2009, the range was 5
percent to 15 percent.
Currently, 8.1 percent, or $1.3 billion, of the fund's $16
billion private markets portfolio is invested in venture and
growth capital, a level Bruebaker predicts will gradually fall.
Washington State has indeed been a reluctant venture
investor in recent years. In 2011, the board committed directly
only to Menlo Ventures XI. Before that, its most recent direct
venture investments dated to 2006 and included only New
Enterprise Associates 12, Menlo Ventures X and OVP Venture
"If, by chance, we ever get an opportunity to invest in a
top-quartile venture fund, we will invest with them," said
Bruebaker. But, he added, "we are not going to chase investments
because the odds are against us."
At CalPERS, the chief investment officer Joe Dear said in
August that his pension planned to reduce its venture target
allocation to less than 1 percent for two reasons.
"One is that venture has been the most disappointing asset
class over the past 10 years as far as returns," Dear said, "and
second, it's very difficult for a large fund like CalPERS to
gain access to the best venture partners in the size that makes
a difference to our performance." CalPERS had $2.1 billion of
its $240 billion portfolio in venture capital.
While Washington State plans to re-up with its existing
top-quartile venture managers, Bruebaker doesn't see the
opportunity to make new venture investments on a "level playing
field" due to access issues.