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Pitch the Second Line: What a Danish Pension CIO Just Told Smaller GPs

PCD : Updated on October 1, 2026

Why Danish Pension Funds Struggle to Back Small Funds

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Paper-collage illustration of a figure with raised arms beside a mountain of grey and navy folders and stacked forms; the one sheet on top of the pile is outlined in teal.

Last reviewed: 30 September 2026

On 30 September 2026 the chief investment officer of Sampension, one of Denmark's largest pension providers, told the business daily Finans that his fund must do the same regulatory work for a small venture commitment as for a large one. The obstacle is not the manager. It is the file the investor has to build for each fund. A manager who understands that file can arrive with it already built.

Sampension's CIO says his pension company does the same regulatory work for a small venture fund as for a large one. Under Solvency II's prudent person principle, as Denmark applies it, the insurer must identify, measure, monitor, manage, control and report each fund's risks. Proportionality is allowed, but not built in.

What did Sampension's CIO say about small fund commitments?

Sampension had just announced a commitment to a new fund from Seed Capital, a Danish venture firm, taking its total in Danish venture to about DKK 650 million. Henrik Olejasz Larsen said the pension company is ready to invest more, but that venture investing is cumbersome partly because of regulation that comes from the EU and is, in his words, implemented in Denmark with "a very strict interpretation." In practice, he said, the requirements are largely the same for small and large investments, so Sampension does the same work whether the fund is a small Danish venture fund or a large American one.

Politicians want more pension money to flow into Danish growth companies. Days earlier, Denmark's minister for taxation and growth told a Copenhagen fintech conference that the government would present, within three months, a plan to let pension companies invest in scale-ups with less of the usual hassle, Børsen reported. What Larsen wished for was a proportionality principle, one where "small investments aren't held to the same requirements as large ones," and where the requirements focus instead on the risk of the overall portfolio.

Any manager who has ever pitched a fund of modest size to a large Nordic institution will recognize the problem from the other side of the table. The investment team is interested. The process is not.

Why does a small fund commitment cost a pension fund as much as a large one?

Sampension is a life insurance company, so it sits under the European Union's Solvency II regime. Article 132 of that directive carries what is called the prudent person principle: an insurer may only hold assets whose risks it can identify, measure, monitor, manage, control and report. Denmark writes that principle into national law and, through its supervisor's guidance on alternative investments, applies each of those six verbs to every individual investment. The guidance also requires look-through. Holding a fund does not relieve the investor of anything. If the fund cannot support the six verbs, the investor may not hold it.

The supervisor's inspection record shows what that means in practice. Since 2023, inspections of a series of Danish pension providers have produced orders requiring, variously, that all material risks be measured for every private equity fund held, that the benchmark and risk premium behind each return requirement be documented, that interim valuation models be validated, and that managers' own valuations be sample-checked rather than accepted on trust. Sampension itself received an order in 2023 on the frequency of its revaluation of alternatives and on its control of fund managers' valuations.

None of that work scales down with the size of the check. A commitment that represents a fraction of a percent of assets needs the same file as one that represents several percent. Larsen's own account is the same: Sampension does the same work for a small Danish venture fund as for a large American one. That is the arithmetic that decides whether a small fund is worth an institution's time.

The irony is that the Danish guidance already points toward the principle he asked for. It says every company must meet the prudent person principle regardless of the size of the investment, but that proportionality should shape the investor's choices: more extensive work on large investments that matter to the whole portfolio than on small ones. It names small investments in non-complex companies, including some venture investments, as a case where proportionality could apply. But proportionality is something the investor must argue for, per investment, in front of an inspector. It is not a feature of the standard itself.

How did the United States handle the same problem?

American pension law went through the same argument a generation ago. Trust law in some jurisdictions had judged an investment's prudence on its own, without regard to its role in the portfolio, and after ERISA in 1974 the prudent man standard was widely read as keeping pension funds out of high-risk assets such as venture capital. In 1979 the U.S. Department of Labor issued a regulation under ERISA that changed the unit of analysis: a fiduciary satisfies the duty of prudence by giving appropriate consideration to "the role the investment or investment course of action plays" in the plan's portfolio, and by determining that it is reasonably designed, as part of that portfolio, to further the plan's purposes. Materiality was built into the test. The smaller the position, the more its relevant facts are portfolio facts. The effect was large. In 1978 pension funds supplied 15 percent of the US$424 million committed to new U.S. venture funds. By 1986, when commitments passed US$4 billion, they supplied more than half, according to Gompers and Lerner.

The European text does not forbid that reading. Article 132 itself speaks of the security, quality, liquidity and profitability of the portfolio as a whole. The strictness Larsen describes lies in how the rules are implemented and interpreted in Denmark, and a national supervisor could add a materiality threshold to its own guidance without waiting for Brussels. Until one does, the burden sits with the investor, and a manager can choose to carry part of it.

What does a Danish pension fund need from a smaller fund manager?

John-Austin Saviano, founding chief investment officer of the University of California, Berkeley endowment and now a backer of new investment firms, put the general case in a LinkedIn post earlier this year. A manager is not pitching a person. A manager is equipping an internal debate, and the job is to "win the rooms you'll never see." In a Solvency II institution, one of those rooms belongs to the risk function, and another, further out, to the supervisor. His later advice on materials applies here as well: think in layers, with a one-page summary, a short document, and a deep supplement behind them. What follows is the deep layer. Build it before the first meeting, and hand it over when the second line asks for it, not before.

The people who decide whether a small fund is worth the trouble are not only the investment team. They are the risk function, the second line, whose job under the Danish rules is to make an independent assessment of the risks the investment team identified and to confirm that the institution's risk system can handle the investment. A manager who wants a Nordic institution to say yes should be writing for that reader. Mapped to the six verbs the supervisor inspects against:

Identify. Bring a written risk register for the fund in the investor's own categories: strategy, manager and key-person, concentration, currency, valuation, and sustainability risk, which the delegated regulation now requires them to cover. The investor's team should be editing your document, not authoring one.
Measure. Danish pension providers have been ordered to run a documented return requirement for each fund, with a defensible listed benchmark and a risk premium they can justify. Supply the inputs: a full cash-flow track record, a leverage-adjusted set of listed comparables with a beta they can cite, and the sector index mapping. You are choosing the benchmark their risk function will later be asked to defend.
Monitor. The guidance allows the underlying holdings of a fund to be monitored through a data-based, quantitative approach. That sentence is the escape hatch for small positions. Offer portfolio-company data in a standard template, event-driven notices when the risk picture changes, and interim valuation updates on request rather than at quarter end.
Manage. The usual governance rights, stated up front rather than negotiated late: an advisory committee seat or observer role, key-person and removal terms, information rights. The investor's file needs to show a lever exists. Whether they ever pull it is another matter.
Control. This is where small funds most often fail. One of Sampension's 2023 orders concerned checking a manager's valuation data and assumptions. Give them the valuation policy, the model inputs, an auditor's review of the marks, a third-party administrator, and a regulated manager wrapper. Each is an outside party the compliance function already recognizes.
Report. Supervisory orders have required pension boards to receive regular reporting on whether their main private equity funds are developing as expected and what is driving it. A one-page, board-ready quarterly note written for that purpose takes work off the investor's staff every quarter for the life of the fund.

What else makes a small fund easier for a pension fund to hold?

Paperwork lowers the cost of the file. Two structural moves change what the file is about.

Fit into a frame the board has already approved. In several inspections the Danish supervisor has ordered pension boards to define the private equity strategies they will hold by stage, risk level, leverage, ownership and horizon. An institution whose board has already carved out an early-stage bucket with aggregate limits can approve a fund inside it far more cheaply than one that needs a bespoke case. Ask whether the frame exists before you pitch into it.
Bring a recognized institution's diligence with you. A state or supranational anchor, such as Denmark's export and investment fund or the European Investment Fund (which appears in our directory of development finance institutions), carries its own monitoring apparatus that the investor's second line can lean on. From 30 January 2027, Commission Delegated Regulation (EU) 2026/269 can also lower the capital charge on equity held through programs with a significant public guarantee or subsidy, subject to supervisory approval.

What should a smaller manager do before a Nordic meeting?

A deck does not solve this. A better deck does not solve it either. What the Nordic institution needs from a small manager is evidence that holding the fund will not consume more of its risk function's time than the position can justify. The manager who brings the risk register, the benchmark, the data feed, the valuation policy and the board note has answered the question the investor's compliance officer would otherwise have to answer alone, at the investor's expense. For how institutional allocators screen the first approach, see How institutional allocators screen out cold outreach.

That is also the logic behind how Private Capital Development works. We act as an institutional filter for the investors we correspond with: one manager at a time, one low-friction question, would you like a meeting? The introduction is the product. The filter only works if what passes through it is easy for the investor to hold, and arriving with the second line's file already built is the clearest way a manager can make that true.

And a perfect file still cannot fix an institution whose minimum ticket is set by board policy. That one only the board, or the supervisor, can move. Henrik Olejasz Larsen has now said in public that he would like a proportionality principle.

Frequently asked questions

What did Sampension's chief investment officer say about small fund commitments?

On 30 September 2026, Henrik Olejasz Larsen told Finans that Sampension faces largely the same regulatory requirements for small and large investments, so it does the same work for a small Danish venture fund as for a large American one. He said the rules come from the EU but are implemented in Denmark with a very strict interpretation, and wished for a proportionality principle.

What is the prudent person principle, and how does Denmark apply it?

Article 132 of the Solvency II Directive says an insurer may only invest in assets whose risks it can properly identify, measure, monitor, manage, control and report. In Denmark the principle sits in section 175 of the Insurance Business Act, and the Danish Financial Supervisory Authority's 2024 guidance applies it to each alternative investment, including investments made through funds.

Does the prudent person principle apply to small investments?

Yes. The Danish supervisor's guidance says every company must meet the principle regardless of the size of the investment. It also expects proportionality: more extensive work on large investments that matter to the whole portfolio than on small ones. It names small investments in non-complex companies, including some venture investments, as a case where proportionality could apply.

What is the difference between the U.S. prudent man rule and the EU prudent person principle?

The 1979 U.S. regulation under ERISA treats an investment's role in the portfolio as a relevant fact and asks whether the investment is reasonably designed, as part of the portfolio, to further the plan's purposes. Article 132 also refers to the portfolio as a whole, but pairs it with a test that the insurer can handle the risks of each asset, and Denmark's supervisor applies that test investment by investment.

What does a Danish pension fund need from a smaller fund manager before it can commit?

It must be able to show its supervisor that it can identify, measure, monitor, manage, control and report the fund's risks. A manager can lower that cost by supplying a risk register in the investor's categories, return and benchmark inputs, portfolio data, a valuation policy with independent review, clear governance rights, and a board-ready quarterly note.

Is Denmark going to change the rules?

Possibly. In late September 2026 Denmark's minister for taxation and growth said the government would present, within three months, a plan to make it easier for pension companies to invest in scale-ups, Børsen reported. Larsen's proportionality principle had not been adopted as of the date this article was last reviewed.

Is Solvency II changing in 2027, and will it help smaller funds?

Directive (EU) 2025/2 applies from 30 January 2027. Its new proportionality regime is for small and non-complex insurers, not for small investments. It also sets a preferential 22 percent risk factor for qualifying long-term equity. Delegated Regulation (EU) 2026/269 lets insurers assess the long-term equity criteria at fund level, rather than for each holding, for certain fund types, including European venture capital funds and unleveraged closed-ended funds.

Sources

Educational content only. This article was researched and drafted with AI assistance, reviewed for accuracy before publication. It explains publicly available regulation and supervisory practice for general information, current as of the "Last reviewed" date shown above. It is not legal, tax, or compliance advice, and no reader should act on it without engaging qualified counsel in the jurisdictions in question. Private Capital Development LLC is not a law firm and is not a broker-dealer. PCD facilitates relationships between fund managers and institutional investors, on a flat-fee retainer.

About Randy Mitchell. Randy Mitchell is the co-founder of Private Capital Development LLC. He spent thirteen years (2001–2014) at the U.S. Department of Commerce's International Trade Administration, where he designed and ran the first Certified Trade Mission program for U.S. private equity and venture capital fund managers, organizing and personally attending more than 150 LP/GP introductory sessions across 45 cities on six continents, Copenhagen, Helsinki, Stockholm and Oslo among them.

If Nordic institutions are on your roadmap: our Concierge program provides ongoing one-to-one introductions of managers to institutional investors on a flat monthly retainer. We handle the relationship side of the problem. Your counsel and your operations team handle the file. For the manager-side rules when marketing a fund into the EU, see What Is AIFMD?

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