Illustration: Eniola Odetunde/Axios

Police unions are under a political microscope, with reformers arguing that they too often help keep bad cops on the streets.

Why it matters: This controversy could soon move beyond elected officials to venture capital and private equity firms that count police unions among their limited partners.

Public employees unions have long invested in alternative investment funds, from mega-groups like CalPERS and CalSTRS down to small town firefighter pensions.

  • The NYC Police Pension Fund, for example, had around $2.5 billion worth of private equity investments as of last June, representing around 5% of its investment assets.
  • The L.A. Fire & Police Pensions had nearly $2.7 billion worth of private equity investments as of the end of March, representing 12.5% of its investment assets.
  • In both cases, venture capital funds are included under the "private equity" umbrella.

VC and PE firms are partial to public pensions because most of them are still defined benefit plans, and are particularly partial to public safety unions because it makes them feel like noble benefactors.

  • I recall a conversation from years ago with a VC (now retired) who took great pride in how his hometown’s fire department was among his firm’s limited partners. It was tiny compared to most of the other LPs, but it was the one he wanted to talk about.

Yes, but: Now police unions are beginning to get looked at as an exception to the rule.

  • In politics, for example, House Democrats are shelving a bill they introduced last year to enable more police to unionize, with its co-sponsor telling Axios that it could “contribute to acts of police brutality."
  • One major Bay Area venture firm tells me, on background, that it doesn’t have any police pensions as direct LPs, but is looking to see if it has any indirect police pension investors via funds-of-funds.
  • A spokesperson for Vista Equity, which counts both NYC and LA police pensions among its LPs, declined to respond to a request for comment — which is anything but a vote of confidence. Another PE exec, whose firm is currently fundraising, said “there’s no way in hell I want to be part of that story.”

To be clear, there isn't an active divestiture movement. And there won’t be, because it’s virtually impossible to force out an existing LP, so long as it keeps meeting its capital calls.

  • Plus, there is a very delicate balance between supporting the pensions of individual police officers and possibly opposing the organizations that oversee those pensions.

But don't be surprised if certain firms take this moment to reassess future fundraising, particularly in light of renewed (or new) emphasis on helping to improve racial equity. In addition to hiring, investment and philanthropy, it's an area where VC and PE firms can wield influence.

Go deeper

Updated 26 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3:30 p.m. ET: 18,614,542 — Total deaths: 702,330 — Total recoveries — 11,181,018Map.
  2. U.S.: Total confirmed cases as of 3:30 p.m. ET: 4,793,950 — Total deaths: 157,416 — Total recoveries: 1,528,979 — Total tests: 58,239,438Map.
  3. 2020: Joe Biden will no longer travel to Milwaukee for Democratic convention.
  4. Public health: Florida surpasses 500,000 confirmed casesModerna skirts disclosures of vaccine costs.
  5. Sports: The return of high school sports hangs in the balance — UConn becomes first FBS team to cancel football season.
  6. Education: Chicago Public Schools to begin school year fully remote.
Updated 37 mins ago - World

Beirut explosion: Death toll rises to 135, officials under house arrest

Photo: Anwar Amro/AFP via Getty Images

The death toll from Tuesday's explosion in Beirut, Lebanon has now surpassed 130, including at least one U.S. citizen, amid a search for answers as to why a huge store of ammonium nitrate was left unsecured near the city's port for nearly seven years.

What we know: The government says around 5,000 people are injured. Defense Secretary Mark Esper said current indications are that the massive explosion was accidental, despite President Trump's puzzling claim on Tuesday evening that it appeared to be a bomb attack.

Exclusive: Trump campaign seeks early September presidential debate

Photo: Jim Watson/AFP via Getty Image

The Trump campaign is asking the Commission on Presidential Debates to move up the last presidential debate to the first week in September to get ahead of an expected surge in early voting.

Driving the news: President Trump's personal attorney, former New York City Mayor Rudy Giuliani, made the request in a letter dated Wednesday and obtained by Axios.