THE Tennessee Consolidated Retirement Systems (TCRS) board of trustees' investment committee has committed a total $75 million to two funds, bringing the pension fund's commitments to $424.3 million since the new program was authorized.
Up to $50 million has been committed to Berkshire Fund VIII and up to $25 million to Khosla Ventures IV, Lamar Villere, TCRS private-equity program director, confirmed for VNC this morning. This is TCRS second allocation to Khosla, the previous commitment having gone to KV III.
Khosla makes a strong pitch for being pro-entrepreneur on its website, insisting it prefers "brutal honesty" to hypocritical politeness and that it is resolved to making great companies out of good ones.
Khosla's "what we look for" page reflects the lexicon on modern private equity, with interests cited including mobile, Internet, alternative energy and other "unconventional ideas." Using such terms as "Black Swan," "A-team" and "contrarian approaches to existing markets," Khosla provides a deft description of its mindset on its website.
Khosla's says that in the seed-stage realm, "what we're really looking for is a crazy idea that may have a significantly non-zero chance of working."
Berkshire's site says its has raised $6.5 billion for seven funds; its minimum investment in a company is usually $50 million and it typically looks for companies with a minimum $25 million EBITDA and revenue in the $200 million to $2 billion range. Berkshire's pie-chart of its sectoral interest includes transportation, consumer products, manufacturing, energy and other targets.
David Weiden, who has previously graced the Forbes Midas List, was Villere's Khosla contact and Raleigh Shoemaker was the opposite number at Berkshire, Villere said. Cambridge Associates represented TCRS on both commitments.
Actively operating less than two years, the program was authorized by the Tennessee General Assembly in 2008 and aims to commit about $275 million per year. Up to 5% of the TCRS portfolio may be invested in private equity; the TCRS currently has about $32.1 billion in assets, reflecting recoupment of asset-value eroded during the Great Recession.
For a summary of TCRS commitments to funds to date, please see our previous report here. VNC