amazing writeups. going to be interesting how much folks adjust their endowment payout rates down.

Market timing never works in venture. But the possibility of never realizing the current high valuations is part and parcel of the illiquidity premium.

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"The University of Minnesota’s endowment gained 49.2% for the year ending June 30, while Brown University’s endowment notched a return of more than 50%, said people familiar with their returns, which aren’t yet public.

Meanwhile, Duke University over the weekend said its endowment had gained 55.9%. Washington University in St. Louis last week reported a 65% return, the school’s biggest gain ever, swelling the size of its managed endowment pool to $15.3 billion. The University of Virginia’s endowment reported a 49% gain. Universities’ returns may include portions of endowments, plus other long-term investments.

The string of blockbuster returns is likely to continue when other endowments with significant venture exposure report their performance."

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"Beneficiaries include top venture firms like Sequoia Capital, which invested less than $500 million between both DoorDash Inc. and Airbnb Inc. Today those two investments alone are worth over $23 billion. Many of those gains are split between two of Sequoia’s main U.S. venture funds, each of which raised less than $600 million from investors.

Although Sequoia is mum on its specific investors, a securities filing in 2014 revealed the roster of investors in its flagship fund was filled with university endowments. Those schools included the University of Notre Dame, Harvard University, Vanderbilt University, the University of California system, Princeton University, Bowdoin College and Brown.

Outsize gains are likely to be concentrated among big endowments. Those managing more than $1 billion had an average venture allocation of 11%, according to a 2020 study by the National Association of College and University Business Officers and TIAA. That portion dropped to 5% for endowments managing $501 million to $1 billion."

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"Endowment chiefs say they want to avoid focusing on short-term gains when they invest for the long haul. Endowments—which fund financial aid, faculty salaries and capital projects—often aim to generate a school’s annual spending rate, inflation, plus a little extra to support current and future generations of students.

But the reticence of endowment chiefs could be driven partly by worries over whether they will be able to hang on to those returns if valuations collapse."

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