Suggested by 
Tremayne Tatem
over 1 year ago
Columbia and MIT have recently posted negative returns on their endowment fund investments in venture capital (VC) and private equity (PE), prompting universities to rethink their investment strategies.
Currently, universities face the following constraints when making direct or co-investments:
North American college endowments represent over $600 billion in assets, with more than half of those funds held by the 30 largest endowments.
Most of these endowments are designated for donor-specific requests.
However, students, concerned administrators, and even Congress are putting pressure on investment managers for more transparency.
Congress is likely pressuring college investment offices with legislative threats to increase transparency about where their large endowments are invested.
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Are you interested in addressing this Unmet Need?
In a groundbreaking partnership, bitcoin native financial services company Unchained and the University of Austin are launching the first long-term endowment fund held in bitcoin. This innovative collaboration aims to raise $5 million, which will remain invested in bitcoin for at least five years. This initiative marks a significant step in integrating bitcoin into higher education, reflecting a mutual commitment to forward-thinking financial strategies.
https://www.uaustin.org/blog/unchained-and-university-of-austin-introduce-pioneering-bitcoin-endowment
More small school endowments will need to perform at the same level or higher level than Ivy league schools to secure its future.
https://www.wsj.com/finance/investing/the-small-university-endowment-that-is-beating-the-ivy-leagues-8ce37cf1
"Although PRINCO uses outside firms to invest the endowment’s money, Golden chafes at the phrase “manager selection.” He says it implies that the managers do most of the decision-making. Instead, he sees his work as partnering with managers.
PRINCO is frequently the first investor in a new fund. Some managers said the endowment will commit capital even earlier than that, coming in before the next official fundraise."
https://www.institutionalinvestor.com/article/2c6f8kp9jrylwkwiwiqrk/culture/how-andy-golden-reinvented-the-endowment-model-for-princeton
"Private HBCUs on average have only one internal investment management professional, often as part of a broader role. They also have minimal external support, typically collaborating with just one asset manager and one institutional investment consultant. Conversely, non-HBCUs average six internal investment staff and a host of external asset manager support."
https://www.pgim.com/HBCU
"But securing investment in the most prominent funds is a competitive endeavor, and members of the Harvard Management Corp (HMC) have discussed the possibility of the University losing out on future investment opportunities amid campus tensions, according to the Wall Street Journal."
https://www.thecrimson.com/article/2024/1/25/hmc-executives-visit-silicon-valley/
"In recent months there has been a growing split between categories of limited partners. Pension funds and endowments have become notably cautious about how much and to whom they allocate in the venture, with many rejecting the category altogether. Meanwhile, we have observed that family offices in the U.S., who helped fuel the VC frenzy of 2020-21, are increasingly interested in investing directly in startups rather than going through funds, in addition to generally allocating less to VC overall. "
https://www.techstars.com/blog/pov/a-profound-and-unprecedented-reset
CEO | Founder | Managing Partner @ Platform Venture Studio
Definitely aligns with my experience.
Why are college endowments so massive?
https://youtu.be/GqiArn1lyT0?feature=shared
HBCUs have small endowments compared with other colleges, but have seen an increase in donations since the racial justice protests spurred by the killing of George Floyd in Minnesota. Spelman, which has about 2,400 students, has been relatively well-funded though, reporting an endowment of $571 million in 2021.
https://www.washingtonpost.com/national/2024/01/18/spelman-college-donation-100-million-hbcu-black/e07905f2-b620-11ee-b285-0853d4d1b92f_story.html
"...is university endowments, which have grown incredibly large on the backs of subsidies from the taxpayers, and they have made these universities completely independent of any political, financial, or other pressure, and that is why the university system in this country has gone so insane.”
https://capitalresearch.org/article/legislation-proposed-to-increase-taxes-on-large-university-endowments/
Picking an officer from another University follows a pattern: prior to working at PRINCO, Golden [was] the chief coordinating officer and portfolio strategist at Duke University’s Duke Management Co.
https://www.dailyprincetonian.com/article/2023/11/princeton-news-adpol-princo-president-tuohey-golden-endowment
Overall endowment performance has been a sunnier picture than in 2022, when many endowments recorded their worst annual performance since the global financial crisis. Still, several large institutions recently marked their investments in the red: MIT and Duke posted one-year returns of -2.9% and -1%, respectively, for the fiscal year ending June 30, 2023.
https://pitchbook.com/news/articles/university-endowments-private-equity-venture-capital-returns