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

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 why a Danish pension fund cannot economically back small funds. The reason is not the manager. It is the file the investor has to build for each one. A manager who understands that file can arrive with it already built.

What Sampension said

Sampension had just announced a commitment to a new fund from Seed Capital, a Danish venture firm, and Henrik Olejasz Larsen used the occasion to say something Nordic allocators usually say only in private. Politicians want pension money to flow into Danish growth companies. The investment rules, as Denmark's supervisor reads them, make that expensive to do at small scale. What he 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 a small commitment costs the same 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 2024, Danish pension funds have been ordered to measure all material risks for every private equity fund they hold, to document the benchmark and risk premium used in each return requirement, to validate their interim valuation models, and to sample-check the data and assumptions behind each manager's own valuations rather than accept them on trust. Sampension itself received an order in 2023 on the frequency of its revaluation of alternatives.

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. That is the arithmetic behind Larsen's complaint, and it is the arithmetic that decides whether a small fund is worth an institution's time.

The irony is that the Danish guidance already contains the principle he asked for. It says proportionality should shape the investor's choices, and it names small investments in non-complex companies, including some venture investments, as the case where it 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.

The United States settled this in 1979

American pension law went through the same argument a generation ago. The original prudent man rule, dating to 1830, judged each asset on its own, and under it a pension trustee could not defend a venture commitment however small it was. 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. Within a few years, pension funds had become the largest source of venture commitments in the United States.

The European text does not forbid that reading. The strictness Larsen describes is a matter of supervisory practice, 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 "safe enough" looks like: six things the investor must be able to do

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 can live with the fund for a decade. 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 investors 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. Sampension's 2023 order was specifically about 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. Pension boards have been ordered to receive regular reporting on whether each fund is 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.

Two moves that change the unit of analysis

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

1. Fit into a frame the board has already approved. Supervisors have ordered Danish investment boards to define the fund 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.
2. 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, carries its own monitoring apparatus that the investor's second line can lean on. From 2027, the amended Solvency II rules can also lower the capital charge on equity held through programs with a public guarantee, subject to supervisory approval.

What this means for a manager on the road in the Nordics

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.

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, and the relationship behind it decides whether a yes becomes a meeting. In our own 2026 records, an investor who had written to us before saying yes to an introduction went on to hold the meeting 36 percent of the time. One who had never written to us: 12 percent. Part of that gap is warmth, and the samples are small, but three to one in follow-through is hard to explain away.

The filter only works if what passes through it is easy for the investor to hold. 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 just asked the supervisor to.

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.