Which Portfolio Gap Does the Manager Fill?
A venture manager's value to a pension depends partly on what it adds to the whole portfolio. A strong software seed fund may repeat risks already held. A good specialist in a different market or stage may do more to spread them.
The ILPA Due Diligence Questionnaire provides a useful structure once the plan knows what it needs. A repeatable process lets the investment committee see how evidence leads to a recommendation and reduces its dependence on one persuasive meeting.
ILPA updated the DDQ and Diversity Metrics Template through 2021 to reflect private-market review practices at the time. The template groups questions, while the pension's own priorities determine which answers matter most.
Can the Team Repeat the Track Record?
A headline return tells the committee what happened in an earlier fund. Rebuilding the record around the people and decisions that created it shows whether the current team can produce a similar result with more capital.
- Attribution: Who sourced and led each important investment?
- Access: Why did the company make room for this manager?
- Ownership: Did entry cheques and reserves create meaningful positions?
- Team: Will the people responsible for the record remain through the next fund?
- Platform: Can reporting and controls support institutional capital?
These questions connect performance to the proposed fund. They help explain both the historic result and why the manager belongs in the portfolio now.
| Area | Question | Evidence |
|---|---|---|
| Team | Who made the decisions and will they remain? | Deal attribution, references, and succession terms |
| Strategy | Can the manager deploy the new fund without drift? | Cheque size, ownership, deal pace, and partner capacity |
| Access | Why does the manager see and win the right companies? | Source data, founder references, and loss analysis |
| Returns | What produced gross and net performance? | DPI, TVPI, PME, and company contribution |
| Operations | Can the firm support institutional capital? | Finance, valuation, compliance, reporting, and controls |
How the Manager Fits the Programme
Underlying holdings can reveal a mixed picture. A growth fund may shorten the path to liquidity, yet its companies can overlap with public equities and other late-stage managers. The fund may reduce one risk while adding to another concentration.
A new manager might replace an existing one, add an exposure the plan lacks or increase an intentional concentration. Each role has a different effect on annual pacing and the room left for future re-ups.
The conditions behind the old record also matter. A small first fund may have bought meaningful ownership at modest entry values. A much larger successor may invest in bigger rounds and later stages, leaving less of the earlier strategy intact.
Attribution Makes Track Record Useful
Each important deal has a history of sourcing, investment and exit decisions. That history shows which partner built the relationship and made later reserve choices. For an emerging manager, it also helps distinguish the person's contribution from the capital and brand of the previous firm.
Operations enter after the investment case is clear and remain essential to it. The pension will rely on valuation and reporting for years. A newer firm can use experienced providers, provided responsibility is clear and the workflow can be demonstrated. Working controls matter more than the appearance of a large franchise.
- Invest: Clear edge, repeatable team, suitable fund size, and strong operations.
- Resize: Attractive manager but too much programme concentration.
- Stage: A smaller initial commitment allows the pension to learn more before increasing its exposure.
- Pass: Returns cannot be attributed or strategy changes with the new fund.
- Revisit: Good thesis but operations or team transition need more proof.
The final memo brings together the fund's role, the first commitment size and the evidence that would support a re-up. Those questions also provide a basis for monitoring after approval.
A Screen That Reflects the Programme
A $100 million venture allocation with a $10 million minimum can hold about ten direct funds before adding pooled funds or co-investments. The commitment plan therefore limits how many managers the pension can choose and back with confidence.
Consistent questions make managers easier to compare. The investment policy determines the weight of each answer, though a standard screen may miss a specialist's particular strength.
One screen might assign 30% to investment advantage, 25% to the portfolio plan, 25% to operations, and 20% to alignment and terms. The numbers provide a consistent basis for discussion while leaving room for judgment.
A pension manager selection scorecard can balance investment advantage, portfolio plan, operations, and alignment.
Pension VC Manager Selection Scorecard
Historical IRR becomes useful when the investment strategy, fund model, and reporting also fit the pension portfolio.
View scorecard assumptions
| Selection area | Illustrative weight | What the pension reviews |
|---|---|---|
| Investment advantage | 30% | Deal sourcing, decision quality, partner attribution, repeatability. |
| Portfolio plan | 25% | Fund size, ownership targets, reserves, stage and sector exposure. |
| Operations | 25% | Reporting, valuation policy, audit, administration, compliance. |
| Alignment and terms | 20% | GP commitment, fee load, carry, conflicts, key-person protections. |
Pension funds can build durable venture portfolios when manager count, commitment size and timing fit the staff and consultant capacity. Buyout and growth investments share that capacity. Credit and real assets may create different cash demands, so total-plan liquidity limits the room available for venture.
Frequently Asked Questions
Should pension funds prefer established VC firms?
Established firms may offer deeper reporting and brand access. An emerging or specialist manager may provide more focused exposure and a better strategy fit.
What should a pension ask before committing?
The people who created the returns, and whether they will stay, often reveal more than the headline track record. Reserves and fund size then help explain whether the team can repeat those results.