Episode summary
CEO of Commonfund on Venture Capital, Power Laws & the Future of IPOs
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Mark Anson
Summary
Mark Anson argues that venture capital is less about buying access with the biggest check and more about earning access through trust, responsiveness, and knowledge-sharing. Using his experience at CalPERS, he says the hard part was convincing elite Silicon Valley firms to take a public pension fund as an LP, and that even a box of Krispy Kreme donuts helped open the door to a first investment.
He frames venture as the ultimate power-law asset class: a small number of companies drive most returns, dispersion is extreme, and the best managers keep outperforming across cycles. Mark Anson cites numbers showing top-quartile venture managers earning about 18% over the last 10 years, versus 7.5% for the median and minus 1% for bottom quartile managers. Commonfund’s answer is a rules-based process: weekly investment committee meetings, a dedicated venture team, fast co-invest decisions, and systematic vintage-year diversification.
He also argues that innovation is uncorrelated with the business cycle, so investors should not slow down in recessions. On the portfolio side, he says the liquidity premium is real, estimates it at 3.5% long-term and says it is above 5% today. His final advice is to build human capital deliberately: work overseas if possible, get the CFA early, and take prudent career risks.
Key takeaways
- Mark Anson says venture returns come from power-law outcomes, not avoiding losers, so LPs need access to the best managers and patience through failures.
- He says top-quartile venture managers earned about 18% over the last 10 years, versus 7.5% for the median and minus 1% for bottom quartile managers.
- Commonfund’s venture process is rules-based and weekly, which lets the firm answer co-invest requests in 48 hours and stay current on trends.
- Mark Anson says innovation is uncorrelated with the business cycle, so investors should keep deploying capital through recessions to preserve vintage-year diversification.
- He says the liquidity premium is real, measures it at a 3.5% long-term average, and says it is currently a little over 5%.
Notable quotes
“It took donuts to do it”
“You have to demonstrate you're going to be a good partner over a long period of time”
“innovation is completely uncorrelated with the business cycle”
How the episode opens
Mark, you're the CIO of Common Fund, which today has over 40 billion of AUA and AUM. And before that, you were the CIO of the BAS Family Office, one of the best known family offices, where you won family office of the year.
That's right. — And perhaps most famously, you were the CIO of Kalpers, the largest pool of capital in the United States. So, let's start there. Before we started recording, you told me the story of how you got into one of the very top funds in Silicon Valley as CIO of Kalpers.
Absolutely. It's a great story. Kelpers is the largest pool of institutional capital in the United States.
Think of it as a sovereign wealth fund. That's effectively what it is. You know, well over 600 billion at this time.
Now, what's fascinating about Kalpers is as we were building out our private capital program, it was very difficult for us to get access to the best venture managers in Silicon Valley. And what's surprising about that is when you think about where Kalpers is situated in Sacramento, it's only about 80 or 90 miles away from Sand Hill Road where all the best venture capitalists are. But it was very difficult to access those venture capitalists.
First, they're filled up. They already have as many investors as they want. So, they're often unwilling to bring in a new investor.
And the problem with a public pension plan is twofold. First, it's public. And venture capital tends to like to operate behind the scenes and maintain a low profile.
So that was one issue. The second of course is Kalpers can sometimes be political as most state pension plans are. So for those reasons the venture capital community were reluctant to accept Kalpers as an investor.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- venture capital access
- venture alpha dispersion
- power laws in venture returns
- emerging manager selection
- longer private company hold period
Companies and tickers mentioned
- CG
- Commonfund
- CalPERS
- Bass Family Office
- British Telecom Pension Scheme
- Hermes Pension Management
- Nuveen Investments
- Carlyle
Watch the episode
Watch “CEO of Commonfund on Venture Capital, Power Laws & the Future of IPOs” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
