The correct answer is Pension funds.
While wealthy individuals, family offices, and other types of institutional investors such as endowments can also provide funding for venture capital firms, pension funds are often the largest investors and provide a critical source of long-term capital for the industry. Banks, on the other hand, typically do not invest directly in venture capital firms, although they may provide debt financing to portfolio companies.
The amount of capital that pension funds allocate to venture capital can vary widely depending on the fund and its investment strategy. However, in general, pension funds are significant investors in the venture capital asset class and typically allocate a portion of their assets to private equity and venture capital funds.
According to data from PitchBook, pension funds were the largest investor group in venture capital in the United States in 2020, accounting for 29% of all capital invested. In addition, a survey by the National Venture Capital Association (NVCA) found that in 2020, the median allocation to venture capital for US public pensions was 6.0%, while the median allocation for US corporate pensions was 3.1%.
Globally, pension funds are also major investors in venture capital. According to data from Preqin, as of June 2021, pension funds represented the largest source of capital for venture capital funds globally, accounting for 22% of all commitments.
Overall, while the exact amount of capital that pension funds pool for venture capital varies, it is clear that pension funds are a significant source of funding for the industry.