The Massachusetts Pension Reserves Investment Management Board just approved $66 million in new commitments to venture funds from Index Ventures and Union Square Ventures.
The move brings the $105 billion pension system’s total commitment to venture funds this year to $167 million, according to documents prepared for its July 30 investment committee meeting. That stands in stark contrast to last year, when it made a single VC commitment – $30 million for tech investor Wing Venture Capital.
The new commitments include a combined $56 million for Index. MassPRIM committed $18 million to the firm’s 12th flagship early-stage fund, which closed on $800 million in June, and $38 million to its seventh growth fund, which closed on $1.5 billion in July. The pension has invested in 13 of Index’s funds going back to its 2012-vintage second growth fund and sixth early-stage fund, according to fundraising data from affiliate title Private Equity International.
Index, which is co-located in San Francisco and London, invests from seed to growth stage in companies across industries including AI, machine learning, entertainment, fintech, healthcare and security. The firm, founded in Switzerland in 1996 by Giuseppe Zocco and Neil Rimer, has amassed assets under management of at least €2.59 billion with the closings of its two latest funds.
USV received a commitment of $10 million for USV 2024, the firm’s ninth flagship early-stage fund, which is targeting $275 million. Based in New York, USV invests “at the edge of large markets being transformed by technological and societal pressures,” according to its website. MassPRIM has invested in at least 14 of USV’s funds dating back to its 2004-vintage debut fund, according to fundraising data from affiliate title Buyouts.
In February, MassPRIM committed more than $100 million to venture funds, according to a previous Venture Capital Journal report. Those commitments included $17 million for Spark Capital’s eighth early-stage fund, which is targeting $700 million; $34 million for Spark’s fifth growth fund, which is targeting $1.4 billion; and $50 million for Flagship Pioneering’s eighth primary fund, which closed on $3.6 billion (including side vehicles) in July.
The increased VC commitments come on the heels of the pension announcing plans to allocate up to $3 billion to private equity funds, co-investments and secondaries opportunities this year. It invested $2.3 billion in similar opportunities in 2023.
MassPRIM voted in January to keep its target allocation to private equity in the range of 13-19 percent for 2024. It PE allocation stood at 17.1 percent in 2023, according to documents from its January meeting.
Michael McGirr, director of PE, reported that MassPRIM’s private equity performance “remains strong in the long term” with its three-, five- and 10-year returns standing at 14.6 percent, 20.3 percent and 18.7 percent, respectively, gross of fees, according to July 30 meeting documents.
The pension’s one-year return for PE “sits at 8.8 percent gross (7.5 percent net),” the documents state. “Buyouts and growth equity were up this quarter while venture capital was flat. The venture capital portfolio was down 46 basis points for the quarter, but remains down 8.6 percent for the year. Growth equity was up 2.8 percent for the quarter and up 6.6 percent for the one-year period.”