Why Is the Percentage So High?
Five managers holding 50% of venture NAV can reflect a deliberate choice or the growth of a winning fund. Their companies and strategies explain the underlying risk. Uncalled money and likely cash returns show whether that concentration may rise or ease over time.
NVCA's 2026 Yearbook reported that the ten largest funds captured 32.9% of US venture capital raised in 2025. An LP can inherit some concentration as access and re-ups cluster around large firms. That market pattern provides context; the pension's own holdings and cash needs determine how much concentration it can bear.
Top-Five Managers as a Share of NAV
A manager list can look diversified while half of NAV still sits with the five largest relationships.
- Top five managers50%
- All other managers50%
View allocation data and assumptions
| Portfolio segment | Share | How to read it |
|---|---|---|
| Top five managers | 50% | Largest relationships that can dominate reported venture NAV. |
| All other managers | 50% | Remaining manager relationships after the top-five exposure. |
Concentration Depends on What Sits Behind the Names
Five manager names may hide the same risk. Their funds may own the same late-stage firm or need the same funding market to stay open. The risk is harder to defend if their marks rely on similar inputs. It also matters if reducing one fund could cost the plan future access.
Neither 10% nor 50% settles whether the position is sensible. A focused programme may have good reasons to rely on a few managers, but the variety in their strategies and companies determines how much risk is shared.
Manager NAV Is Only the First Layer
| Concentration type | What to measure | Why it matters |
|---|---|---|
| Management firm | All funds, SPVs, and co-investments from the same firm | Team and process risk may be shared |
| Company | Look-through value in the same private company | Several funds may own the same winner |
| Stage | Seed, early, or growth share of NAV | Duration and loss patterns may align |
| Vintage | Value from the same entry years | Pricing and exit markets may be common |
| Valuation source | Share of NAV based on recent rounds or models | One market reset can affect several marks |
Success Creates Concentration Too
If growth caused the large stake, selling now may give up future gains or require a secondary-market discount. The pension could instead reduce its next re-up. Cash paid out over time may also shrink the position.
When large opening commitments caused the concentration, smaller future cheques can reduce its growth without requiring an illiquid sale. Concentration created by gains has a different history, even when the current NAV percentage is the same.
All vintages from one group add to the same manager relationship. Re-ups often arrive before older funds return cash, so future exposure can become large while today's NAV still looks modest.
Questions Before Calling It Too High
- How did the concentration arise? Appreciation and commitment sizing call for different responses.
- Where do the managers overlap by company, sector, stage, team, or valuation source?
- Can the institution sell without a large discount?
- How much capital remains uncalled? Future exposure may be higher than current NAV suggests.
- All funds from the same management group contribute to the exposure, even when they have separate names or vintages.
A policy limit can draw attention to concentration without explaining its cause. The underlying holdings and remaining uncalled capital reveal what the position depends on and how much it can still grow.
How Much Is Concentrated in the Top Five?
In a $1 billion venture NAV portfolio, 10% in the top five managers is $100 million. A 25% share is $250 million, while 50% is $500 million. The dollar view helps the committee compare the exposure with total-plan risk.
How Manager Skill and Portfolio Drift Differ
A manager that began as a 5% commitment can become 15% of venture NAV if its marks rise while other funds remain flat or are written down. The current weight may therefore say more about relative performance than original intent.
Top-Five Manager Concentration in Venture NAV
Once the top five managers approach half of NAV, manager-specific risk becomes a total-portfolio issue.
View concentration data and assumptions
| Top-five NAV share | Total venture NAV | Top-five NAV dollars | Governance implication |
|---|---|---|---|
| 10% | $1B | $100M | Broadly distributed manager exposure. |
| 25% | $1B | $250M | Requires concentration review. |
| 50% | $1B | $500M | Few managers drive portfolio outcome. |
What Makes Concentration Manageable for the Plan
Concentration affects more than reported value. The same manager group may account for a large share of future capital calls. Those obligations can become harder to fund when public markets fall and venture distributions slow.
Success-Created Concentration Is Different From Planned Concentration
A strong manager's NAV may depend on one unsold company or several realized gains. A large remaining stake can fall in value or return cash over time. The next re-up adds another decision because it may deepen reliance on the same team before that uncertainty clears.
A new commitment can add a different source of return or increase an existing one. Without a clear role, it adds concentration without a clear explanation of the benefit.
Frequently Asked Questions
Is high top-five concentration always bad?
Strong gains can make a position large even when its opening size made sense. The resulting dependence on a few teams remains a risk, and future commitments can increase or reduce it.
Should concentration be measured by commitment or NAV?
Commitments describe what the plan chose to invest. NAV describes which managers now account for its value and risk. The two measures explain different parts of the same concentration.