PSERS Recommends $100MM to Tenaya Capital VII, LP

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Overview

  • Fund size is $350 Million with a hard cap of $450 Million
  • Invest in early-growth and late-stage venture-backed technology companies

Fund Strategy

  • Tenaya’s team defines “early-growth” as companies that are in the initial stages of revenue generation (typically up to $5 million per quarter), where the management team has commercialized a product and is focused on operational execution to grow the business
  • The Principals believe that this represents an attractive opportunity for private investment as the risks of technology development and market acceptance have been reduced, while the potential for significant revenue growth remains

Investment Team

  • Tenaya is managed by five Principals: Tom Banahan, Ben Boyer, Stewart Gollmer, Brian Melton and Brian Paul, all of whom have worked together over the last fourteen years
  • Team also consists of a CFO and three investment associates
  • Tenaya is headquartered in Portola Valley, CA, and also has an office in Wellesley, MA

GP “Value Add”

  • An equal partnership that has worked as a team for over a decade
  • Established member of the venture industry’s leading investment syndicates
  • Proven investment selection strategy
  • Market leadership position in early-growth stage venture capital
  • Strong, proprietary dealflow in late-stage venture capital
  • Track record of executing to the Firm’s stated strategy
  • Strong investment performance
  • Continued success after the spinout from Lehman Brothers

Market Opportunity

  • Tenaya provides targeted exposure to early growth venture backed technology companies in markets such as Enterprise Applications, Enterprise Infrastructure, Consumer, Communications, Electronics, etc

Invest with Strong Syndicate Partners

  • Frequent syndicate partners include: Andreessen Horowitz, Benchmark Capital, GSR Ventures and Sequoia Capital.

Risks and Mitigants

  • Fund Size – At $450M, this will be the largest fund that they raise. Mid-stage investment opportunities are very strong
  • Valuation multiples – Tenaya typically invests up to 80% of its funds in mid stage companies, limiting its exposure to late stage companies where the valuations are the highest

Performance History

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History with PSERS

  • This will be PSERS’ fourth commitment to Tenaya. PSERS committed $75 million to Tenaya Capital IV, a 2003 vintage fund, $75 million to Tenaya Capital V, a 2007 vintage fund, and $50 million to Tenaya Capital VI, a 2012 vintage fund

Board Issues

  • Pennsylvania Presence – One portfolio company in PA employing 72 people with an annual payroll of approximately $8.0 million
  • Placement Agents – N/A
  • PA Political Contributions – none
  • Relationship with Consultant – none

Recommendation

  • Staff, together with Portfolio Advisors, recommends that the Board invest an amount not to exceed $100 Million plus reasonable normal investment expenses

Source: Luke Jacobs, PSERS