US venture AUM has grown substantially, but most of it remains in portfolio value rather than deployable dry powder. US venture capital AUM components from the NVCA 2026 Yearbook public data pack. 2025 values are $299.3B of dry powder and $1,077.7B of remaining value.
US Venture AUM: Dry Powder Versus Remaining Value
US venture AUM has grown substantially, but most of it remains in portfolio value rather than deployable dry powder.
View chart data and assumptions
| Category | Dry powder | Remaining value |
|---|---|---|
| 2016 | 100.73$B | 278.37$B |
| 2018 | 131.66$B | 378.01$B |
| 2020 | 171.93$B | 625.95$B |
| 2021 | 225.2$B | 1014.58$B |
| 2023 | 318.21$B | 908.68$B |
| 2025 | 299.32$B | 1077.66$B |
How Institutions Build a Venture Allocation
Institutional venture investing is the process of building and maintaining exposure to venture funds, co-investments, secondaries, or direct investments as part of a larger portfolio. The institution is not simply deciding whether it likes one manager. It is deciding how much capital it can commit, when that capital may be called, how long it can remain illiquid, and how the combined investments will be monitored.
Pension plans, endowments, foundations, insurance companies, sovereign investors, and other large allocators use venture capital for different reasons. Some want long-term growth that is difficult to obtain in public markets. Others want access to specialist managers or companies before they reach the public market. The right structure depends on the institution's obligations, decision-making process, staff, and ability to wait for distributions.
Why One Fund Commitment Is Not the Whole Decision
CalPERS' 2026 Private Equity Annual Program Review shows how a large public investor looks at private markets across allocation, manager count, geography, performance, and governance. That is a better way to think about venture than treating every fund pitch as a separate decision. A manager may be attractive on its own and still be a poor addition if the institution already has similar companies, stages, sectors, or vintage years elsewhere in the portfolio.
Administration also changes the investment experience. CalPERS notes that GP reporting can arrive 120 days after quarter-end. An institution therefore needs enough time and systems to reconcile capital calls, valuations, company developments, and performance before it can report a dependable portfolio view to its own committee or stakeholders.
Who Can Use Venture Capital?
Legal eligibility is only the starting point. The SEC's accredited-investor rules include several entities with more than $5 million of assets or investments, but meeting an eligibility threshold does not show that a venture allocation fits the investor's cash needs or responsibilities.
Different institutions face different practical questions:
- Endowments and foundations must fit long-dated commitments around spending policies and grants.
- Pension plans must connect commitments to benefit payments, formal approvals, and the rest of the plan's asset-liability work.
- Insurance companies may have additional capital, regulatory, and matching requirements.
- Sovereign and government-linked investors may combine financial goals with public policy and detailed governance rules.
- Smaller institutions may use a fund of funds, outsourced investment team, or specialist manager when they cannot build a large internal venture team.
The practical implication is not that one of these routes is always best. It is that the same venture fund can create a different liquidity burden, workload, and concentration risk for each investor.
Venture Capital Requires Patient Capital
Cambridge Associates describes private-investment capital as commonly being locked up for 10 years or more. Venture funds may also use extension periods when companies take longer to exit. The institution should compare the expected life of the venture allocation with the years in which it expects to pay benefits, fund operations, make grants, or meet other obligations.
The early years can be uncomfortable even when the underlying companies are developing. Fees and expenses begin before many investments have had time to appreciate, and exits may take several years. Private-company valuations are also estimates rather than daily market prices. A reported increase in value is useful information, but it is not the same as cash returned to the LP.
Plan Capital Calls Before Counting on Distributions
A commitment is a promise to provide capital when the manager calls it. At year-end 2025, Carta reported that funds in its dataset still held 72% of 2025-vintage capital, 53% of 2024-vintage capital, and 35% of 2023-vintage capital as dry powder. The exact pace varies by manager and market, but the figures show why an institution should not assume that the full commitment will be invested immediately.
A useful cash-flow plan asks when capital may be called, how much remains unfunded, and what happens if exits slow while managers continue investing. It should also allow for fund extensions and new commitments to successor funds. In plain terms, the institution needs to know whether it can keep paying into the programme during a period when little cash is coming back.
More Managers Do Not Always Mean More Diversification
The manager list can look broad while the underlying companies remain concentrated. The NVCA reported that 487 megadeals represented 3.2% of deal count and 67% of value in the 2025 US market. When large financings absorb much of the market's capital, several managers can end up owning the same companies or relying on the same exit environment.
Institutions should look through the fund names. They need to compare stage, sector, geography, company overlap, financing needs, and vintage year across the entire programme. Funds, co-investments, direct investments, and secondaries can work together, but only if the investor understands the exposure created by the combined portfolio.
Emerging and Established Managers Solve Different Problems
An established firm may offer a longer record, a larger team, mature reporting, and experience working with institutional LPs. An emerging manager may offer a narrower strategy, closer involvement from senior investors, a fund size that better fits its opportunity set, or access to companies that larger funds overlook.
Neither label answers the investment question. The institution still needs to establish who produced the earlier results, whether that team remains in place, how the manager finds investments, and whether the strategy can work at the proposed fund size. References from founders, co-investors, former colleagues, and existing LPs help test whether the written account matches the manager's actual behaviour.
Governance and Reporting Are Part of the Investment
Good company selection cannot compensate for weak controls around valuation, conflicts, expenses, or reporting. Before committing, the institution should know who approves investments and valuations, how opportunities are divided among related vehicles, and what happens when the manager faces a conflict. It should also understand the roles of the administrator, auditor, counsel, and advisory committee.
After the commitment, reporting should explain what changed and why. An LP needs to reconcile contributions, distributions, cost, ownership, value, fees, realized proceeds, and material company events. If a valuation changes because of a new financing or a different method, the report should make that distinction clear rather than leaving the LP to infer it.
How Frontierspace Approaches the Question
Frontierspace evaluates private-technology exposure by looking through the vehicle to the underlying company, security, and investor group. We consider whether the business can justify long-term ownership, whether the entry valuation and terms make sense, how much more capital the company may need, and which paths could eventually provide liquidity.
That work applies whether the exposure comes through a fund, SPV, co-investment, growth investment, or secondary transaction. The structure changes the rights, costs, reporting, and concentration, but it does not remove the need to understand the company and the terms being purchased.
CalPERS: changing the allocation before changing the deal flow
In March 2024, CalPERS approved an increase in its total private-markets target from 33% to 40% of plan assets. Private equity moved from a 13% target to 17%.
The decision covered private equity, private debt, and other private assets.
The prior target was 13%.
CalPERS cited this historical private-equity result when explaining the decision.
The figures are specific to CalPERS and are not a suggested allocation. The institutional lesson is sequence: governance and strategic ranges should come before manager commitments, co-investments, and individual company exposure.
Primary sources: CalPERS, private-markets decision (2024). Public example only; no Frontierspace investment outcome is implied.
Frequently Asked Questions
Can smaller institutions invest in venture?
Yes, if the structure fits their resources and liquidity. A smaller institution may use direct fund commitments, a fund of funds, an outsourced investment team, or a specialist manager. The important question is whether it can make the commitment, monitor the investment, and continue funding it through a slow exit market.
What is usually the hardest part of evaluating a venture manager?
Testing whether the manager's earlier success can be repeated is often the hardest part. The institution needs to connect the claimed advantage to actual sourcing, investment decisions, ownership, follow-on choices, and net results rather than relying on brand, portfolio logos, or a short performance summary.
Related Reading
Continue with evaluating emerging VC managers, co-investments and secondaries, and venture capital commitment timing.