There's a lot of talk about how demanding limited partners are these days, requiring proof of performance before they invest. It's considered especially tough for a new firm to raise a fund. And yet some of the biggest LPs are actively seeking nascent PE firms, and some new funds are actually flourishing in their first-time fundraising efforts. (Watch the video below.)

The California State Teachers' Retirement System (CalSTRS) is one LP that is paving the way when it comes to investing in new and next-generation private equity managers. CalSTRS, along with Invesco Private Capital, has launched a program with $550 million to invest in new and next-generation PE managers--those that are raising their first, second or third institutional fund.

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