CalSTRS and Sapphire Partners Join Forces to Invest in New and Next Generation VC Managers

Sapphire Partners will assume management of the CalSTRS New and Next Generation Manager Funds, which includes managing available capital to make new investments into emerging managers focused on early-stage venture capital

WEST SACRAMENTO and MENLO PARK, September 13, 2023 / PRNewswire: The California State Teachers’ Retirement System (CalSTRS), the world’s largest educator-only pension fund with more than $320 billion in assets, and Sapphire Partners, the fund investing strategy of Sapphire, a specialized technology investment firm with over $11 billion in assets under management,⁽¹⁾ today announced a partnership to invest in emerging managers focused on early-stage venture capital. As a part of this partnership, Sapphire Partners will assume investment management responsibilities of five CalSTRS “New and Next Generation Manager Funds” existing funds, representing approximately $1.4 billion in assets under management.⁽²⁾ Sapphire Partners will also have capital available to continue making commitments to new and emerging venture capital managers.

“Emerging managers are critical to the venture ecosystem and an LP’s portfolio, and both CalSTRS and Sapphire Partners have long histories of supporting them on their journey,” said Beezer Clarkson, Partner, Sapphire Partners. “Sapphire believes we are well positioned to identify the next class of rising talent early and help them grow and scale their businesses.”

The announcement comes amid one of the most challenging fundraising environments in recent years, with 91% of emerging managers finding fundraising “difficult or very difficult” in 2023. With many LPs constrained on allocations, Sapphire Partners is excited to be an active and supportive partner for emerging managers seeking to fundraise in this environment and has invested in emerging managers since the strategy’s inception nearly twelve years ago.

“One of CalSTRS’ primary goals since the program’s inception in 2005 is to partner with diverse GPs that represent the demographics of California, and we know greater diversity is a natural byproduct of focusing on small emerging managers,” said Christopher J. Ailman, CalSTRS’ Chief Investment Officer. “This partnership with Sapphire aligns with our long history of finding diverse investment managers. We look forward to partnering with Sapphire on this important mandate.”⁽³⁾ 

Sapphire Partners has been an active Limited Partner since 2012, investing in early-stage venture capital (Seed to Series A) funds within the US, Europe and Israel, with, more recently, a focus on identifying managers Sapphire believes may become the “New Elite” in early-stage VC.

Managers may benefit from Sapphire’s industry insights, its experience investing in emerging managers, and its efforts to demystify the “LP Perspective” through OpenLP, a Sapphire-led resource for the VC community. In addition, the broader Sapphire technology investing platform, featuring a multibillion-dollar direct VC investing strategy, provides managers with market and industry insights from the investment and Portfolio Growth teams and a scaled firmwide infrastructure to tap into where relevant.

This partnership will allow Sapphire to expand its ability to support emerging managers while continuing to focus on established managers through its existing investment platform. Of note, approximately 60% of Sapphire Partners’ relationships began at the emerging manager stage.⁽⁴⁾ Since its inception, Sapphire and the New and Next Generation Manager platform have partnered with approximately 300 funds over their combined history. Today, approximately 70% of Sapphire Partners’ portfolio of existing managers have checkwriters from diverse backgrounds.⁽⁵⁾

About Sapphire Partners

Sapphire Partners has been investing in early-stage venture capital funds since 2012 and seeks to identify and support the “New Elite” managers across the US, Europe and Israel who are uniquely suited to invest in the next generation of technology category leaders. Through its underlying managers, Sapphire Partners has indirectly invested in over 3,200⁽⁶⁾ companies since inception. Sapphire Partners looks to partner with managers across their journey as a GP and is focused on adding value beyond its capital commitments through value-add services, industry insights, and its efforts to demystify the ‘LP Perspective’ through the OpenLP initiative. Sapphire Partners is part of Sapphire, a specialized technology investment firm with approximately $11 billion in assets under management across three distinct strategies and with team members across Austin, Menlo Park, San Francisco and London. To learn more, visit the Sapphire Partners website.

About CalSTRS

CalSTRS provides a secure retirement to more than 1 million members and beneficiaries whose CalSTRS-covered service is not eligible for Social Security participation. On average, members who retired in 2021–22 had 25 years of service and a monthly benefit of $4,809. Established in 1913, CalSTRS is the largest educator-only pension fund in the world with $321.3 billion in assets under management as of July 31, 2023. CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Sustainability Report.

⁽¹⁾ assets under management represents Sapphire’s Regulatory Assets Under Management as of 12/31/2022 per ADV filed March 2023 as well as all assets under management acquired and new commitments made during calendar year 2023.;

⁽²⁾ assets under management represents specific CalSTRS New and Next Generation Manager Funds Regulatory Assets Under Management as of 12/31/2022 per ADV filed in March 2023 for CalSTRS New and Next Generation Manager Funds I-V ;

⁽³⁾ Quotation refers to a statement provided by a current Sapphire investor representative. No compensation was provided to the investor representative by Sapphire in relation to the statement made.

⁽⁴⁾ Sapphire defines an emerging manager as a third-party manager in which Sapphire has invested in a fund series I through III of such fund manager. While Sapphire has used reasonable efforts and assumptions to determine such results according to third-party information and internal analysis, Sapphire provides no guarantee of accuracy of results. Additionally, categorizations may be viewed differently by other market participants;

⁽⁵⁾ Sapphire defines a diverse manager as a third-party manager in which Sapphire has invested that includes a female and/or underrepresented minority professional with investment decision-making ability. While Sapphire has used reasonable efforts and assumptions to determine such results according to third-party information and internal analysis, Sapphire provides no guarantee of accuracy of results. Additionally, categorizations may be viewed differently by other market participants;

⁽⁶⁾ represents the estimated count of portfolio companies in which third party managed funds has invested in which Sapphire Partners has invested. Sapphire Partners has no investment discretion with respect to the investments made by the third-party managed funds in which Sapphire Partners has invested.

Disclaimer 

Nothing presented within this article is intended to constitute investment advice, and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire. Information provided reflects Sapphire’s views as of a time, whereby such views are subject to change at any point and Sapphire shall not be obligated to provide notice of any change. Due to various risks and uncertainties, actual events, results or the actual experience may differ materially from those reflected or contemplated in these statements. Nothing contained in this article may be relied upon as a guarantee or assurance as to the future success of any particular company. Past performance is not indicative of future results.

Media Contact

For Sapphire: Whitney Topping
[email protected]

For CalSTRS: CalSTRS Newsroom
[email protected]