CalPERS’ $4.5 Billion Venture Bet

The California Public Employees’ Retirement System (CalPERS), boasting a substantial $500 billion in assets under management, has made a bold entry into the Silicon Valley venture capital scene. This sizable investment marks a significant transformation in the venture capital landscape, ushering in a new era for both startups and investors.

The 2008 Retreat and Its Aftermath: Post-2008, CalPERS notably retreated from private equity investments, a strategic move that, in retrospect, resulted in an estimated loss of $11 billion in returns. This cautious approach in the past decade highlights the fund's evolving investment strategy and underscores the significance of their current large-scale re-entry into venture capital. One of the primary reasons behind CalPERS' bold move is the undeniable potential for superior returns offered by the venture capital environment. Compared to public markets, VC investments can provide access to highly disruptive, high-growth companies in their early stages. While such investments carry higher risk, the payoff can be significant, with successful exits yielding returns many times the original investment.

Returns: During the period from 2010 to 2016, a time of significant market growth following the Great Recession, venture capital investments delivered an average internal rate of return (IRR) of 21.9%. Notably, the top quartile of performing VC funds achieved an even more impressive IRR of 25.6%. In stark contrast, the S&P 500, a benchmark for public market performance, averaged a more modest 12.2% IRR during the same period.

More Money, More Mania: The influx of CalPERS' funds is expected to intensify the VC environment, leading to increased competition, higher valuations, and potentially larger exits.

Emergence of New Power Players: CalPERS' investment might shift the spotlight to lesser-known VC firms, potentially altering the traditional VC funding landscape to include more diverse and niche sectors.

Shift Towards Long-Term, Sustainable Impact: Aligned with CalPERS' focus on sustainable investments, expect an increased emphasis on ESG factors, influencing startups to prioritize long-term societal and environmental impacts.

A Test Case for Public Pensions in VC: CalPERS' venture into VC is a test case for other public pension funds, potentially leading to a wave of new institutional investment in the venture capital sector. If initial returns show promise we may see a investment gold rush flowing back into investments.

This week, Silicon Valley saw over $335 million in investments, highlighting the region's possible thawing in deal volume from the holidays. Established entities made up the bulk of the deals but we are seeing an uptick in AI and AI infused startups starting to get funding to kick off 2024.

Early Stage:

• Overmoon: A vacation rental platform, raised $10 million in seed funding.

• Echo Labs: Developing AI for human-level transcribing, closed a $7.7M Seed round.

• Mercor: This AI-powered platform for connecting companies with talent secured $3.6 million in seed funding.

Growth Stage:

• AppDirect: Specializing in B2B subscription commerce platforms, secured $100 million, total capital now $530.8 million.

• Lykos Therapeutics: Closed a $100M Series A round, focusing on mental health care transformation.

• Quora: The popular Q&A website raised $75 million in a funding round from Andreessen Horowitz.

• Anecdotes: An enterprise GRC startup in Palo Alto, secured $55 million in Series B funding..

• Luma AI: Known for its 3D capture software, completed a Series B round, raising $43 million with Andreessen Horowitz as the lead investor.

Is this a mere blip on the radar or a signal of a surging VC tide? Only time will tell, for now, let's savor the warmth of this post-holiday volume uptick and watch as January unfolds.

For the last decade, The Philippines has earned the title of “The BPO Capital of the World” with more than 1.5M people contributing over $32B to the economy, making the Philippines a globally trusted destination for employing remote staff. The Philippines is also the number one nation in terms of side hustles with 77% of the population having a part time gig compared to 38% in the US. 

As technology evolves, particularly in the field of AI, industries are trying to work out what impact AI will have on their sector and organizational roles. The growth of AI is also occurring at a time when there is a global jobs shortage. 30 million nurses & midwives, 3.4 million cybersecurity to name just a few.

Silicon Valley HQ has developed a platform (Launchpad) which is focused on helping as many Filipinos upskill as possible. The platform offers users webinars, courses, certification & mentoring with matter experts allowing them to leapfrog, by providing access to new technologies and tools like AI, in order to be competitive for future job placements.

Today, the Silicon Valley HQ platform is already live and deployed in the Philippines. It is provided  as a white-label offering for key universities. To date there has been a strong take-up with more than  500 participants in every webinar and high demand for 1on1 mentoring sessions, partner courses and paid certifications. For more info email Chris Peralta mailto:[email protected]

Around the Valley

Kicking off the year with our first Founders & Funders Mixer in Los Gatos. over 50+ folks showed up for a BYOB chug & hug 🍻 followed by a hangout at Campbell Cigars.

At Campbell Cigars: Bruce Templeton, Brian Sparkes, Tony Zirnoon, Harold Graham, Anthony Saldana, Handoyo Sutanto, Bill Barry, Jessica Kobilova

JPM Healthcare Investor Networking | Jan10

The recently concluded JPM healthcare week was a resounding success, with our investor networking event being a standout highlight. In collaboration with the Open Future Forum team and the esteemed Murray Newlands, we hosted an engaging panel discussion headlined by industry leaders Jessica Karr of Coyote Ventures, Nola Masterson of Portfolia, and SC Moatti of Mighty Capital. Wonderfully moderated by Brian Sparkes.

We are grateful to our sponsors, Sprouts.AI, for their generous support, which helped make this event a reality. We were thrilled to see so many attendees turn out for this exciting event, and we trust that everyone who participated found it to be both informative and insightful.

The Path Ahead Is Near!

The moment we've all been waiting for is finally here! The Path Ahead Summit is set to take place on January 17th, and we couldn't be more excited to see you all there. We've put together an impressive lineup of panelists, keynote speakers, and general partners who will be presenting at the event. And that's not all - we have a few surprises in store that we know you'll love.

The grand ballroom at the Crowne Plaza will be transformed into a buzzing hub of innovation and connections, and we can't wait to see the energy and excitement that will fill the room. This promises to be an unforgettable experience, and we're thrilled to have you join us!

The morning after our Path Ahead evening summit we’ll be holding an intimate LP brunch.  Our goal is to have a select group of GPs present to a group of 20-25 LPs. This brunch will offer investors the opportunity to ask detailed questions and directly engage with the GPs, facilitating a deeper understanding of their investment questions.

Upcoming Events Calendar

• Jan17: Ignite Path Ahead (Palo Alto) password: ignite

• Jan18: Path Ahead | LP Brunch (Los Altos)

• Jan22: AI Investors & Networking (Palo Alto)

• Jan24: AI Startup Pitch Night (Palo Alto)

• Jan25: Revenue Collective (San Fran)

• Jan29: AI User Conference (San Fran)

• Feb13: Founders & Funders (Los Gatos)

Interested in collaborating or presenting at the next Ignite event? Reach out to us and get on our events list!

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