Funds of funds

Insurance companies earn premiums from their policyholders and invest those premiums (known as “float”) for when they are required to pay out future benefits. The monies they earn from investing these premiums are then available to pay out the insurance policies as they mature.

Insurance companies

Sovereign wealth funds

Corporate and state pension funds

Family offices

In the US, to maintain their tax-free status, foundations are required to pay out 5 percent of their funds each year in support of their mission. Thus, over the long term, real returns from venture capital and other investments need to exceed this 5 percent payout level to ensure a foundation’s perpetual existence.

Foundations

Though each LP may have its own benchmark to measure success, common benchmarks are the S&P 500, Nasdaq, or Russell 3000; many LPs will look to generate excess returns of 500–800 basis points relative to the index. That means that if the S&P 500 were to return 7 percent annualized over a ten-year period, LPs would expect to see at least 12–15