(Bloomberg) -- Collective Global, an investment firm co-owned by California pensions, is launching with more than $1 billion of committed assets under management and a goal of broadening the plans’ exposure to venture capital.
The firm, led by Co-Chief Executive Officers Daniel Adamson and Sheel Tyle, will take stakes in VC firms and early-stage startups, it said Tuesday in a statement. It will also make opportunistic wagers that could include secondaries and co-investments.
Collective Global aims to re-imagine “how pensions and other premier asset owners access the innovation economy,” Adamson said in an interview. Management will also co-own the firm.
Each founding investor, including the pensions, will commit at least $100 million.
The firm is entering a challenging environment for venture capital. Fundraising recently hit its lowest quarterly level since 2015, according to Preqin — with rising interest rates, falling asset prices and a tapped-out traditional investor base each curbing the ability of new ventures to gather cash.
The dry spell for startup financing created an opening for Collective Global, Adamson said.
“That distress and dislocation in venture markets has opened VC managers’ minds to newer and better ways to partner with their investors,” he said.
The idea for Collective Global sprang from a 2021 conversation between Adamson and Molly Murphy, chief investment officer of Orange County Employees Retirement System.
Murphy, a longtime venture investor, lamented that pensions had limited access to venture capital because those firms typically preferred endowments and foundations as limited partners.
At the time, Adamson was president of Capital Constellation, a consortium of institutional investors with stakes in alternative-asset managers, including private equity firms. Inspired by Adamson’s model, Murphy proposed a new firm that would link pensions to venture investments, with investors partnering to take stakes in firms and participate in fundraising rounds.
The concept shows that pension investment chiefs and boards “can exercise their power,” said Murphy, whose pension is a founding investor in Collective Global.
“They can be innovative, they can think about things and solve problems without waiting for someone else to show them the way,” she added.
The San Jose Retirement System also signed on as a founding investor because of a “long-standing desire to participate in the upside of VC funds,” CIO Prabhu Palani said in an email, which also noted that the city’s firefighters and police officers support the Silicon Valley ecosystem.
For its first deal, Collective Global is taking a stake in a venture firm that invests in companies across sectors including artificial intelligence, robotics and other technology.
©2023 Bloomberg L.P.