Venture Capital Raises Billions for College Endowments
Before the pandemic, the large endowments of American universities were already filled with money.
But as markets have skyrocketed over the past year, colleges have unlocked one-time gains in a generation that are more astronomical than any weird multidimensional thing their quantum physics professors are working on. New data shows who they need to thank: venture capitalists.
Follow the Yale Trail
Much to the chagrin of the Ivy League, Yale is a trailblazer. In the 1970s, the school paved the way for large American university endowments, i.e. more than a billion dollars, by devoting increasingly large pockets of its investments to capital. risk.
By 2020, large endowments from schools across the country had allocated an average of 11% to VCs, according to The Wall Street Journal. Yale had 16%. The strategy has proven to be lucrative and reliable, but has grown over the top over the past year.
The S&P 500 returned 41% for the year ending June 30, according to the Newspaper. And the average valuation of early stage US startups has increased by more than 50% in 2021 so far to reach $ 96 million. Venture capitalists passed these gains on to their main endowment clients:
- Endowments of more than $ 1 billion generated an average return of 36% in the year ending June 30, according to Cambridge Associates.
- The University of Minnesota endowment increased by 49%, that of the University of Virginia by 49%, that of Brown by 50% and that of Duke by 56%. Washington University’s endowment in St. Louis posted its biggest return on record, at 65%, to $ 15.3 billion.
Just an example: Take Sequoia Capital. Legendary Silicon Valley VC, which controls more than $ 3 trillion in market value, has invested $ 500 million in DoorDash and Airbnb. The two investments are now worth more than $ 23 billion. Among the participants in its flagship fund: the University of Notre Dame, Harvard, Vanderbilt, Princeton and Brown.
Give us a break: As their alma maters cash in, Americans currently hold a record $ 1.73 trillion in student debt.