WSJ: The Daily Start-Up: VCs Watch Their College Funds Wither
Less Endowed - University endowments are significant contributors to venture capital funds, but the financial crisis has exposed weaknesses in these schools’ investments and shrunk their coffers. This is illustrated by reports yesterday from two of the wealthiest, Harvard University and Yale University, which each stated that their endowments tumbled 30%, school records, in the year ended June 30. That’s due in part to their investments in private equity (which includes venture capital) - Harvard, for instance, reported (opens PDF document) that its investments in private equity funds, which generally represent about 13% of its now $26 billion endowment, fell almost 32%. Yale’s commitment to PE is much larger at 20%. Harvard has already said it would reduce its allocation to private equity overall, though it’s not clear how much these schools will adjust their commitments specifically to venture capital. Other wealthy schools, including Stanford, have recorded similar losses, illustrating how the VC industry will have less money to play with.