Oct 25, 2024 · 16m · capital-allocators
WTT: Yale Backs Emerging Managers… and Then What?
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Ted Seides analyzes the Yale Investments Office's new Prospect Fellowship, evaluating its strategic motivations, operational hurdles, and the profound risks and opportunities it creates for emerging managers and the allocator community.
Statements from this episode (15)
Ted Seides Predicts Yale Fellowship Will Face Deluge of Low-Quality Applications
“Yale will be deluged by inbound interest, most of which will be of lesser quality than Yale has reviewed historically.”
Yale Fellowship Gives Allocators Cover to Launch Emerging Manager Programs
“Yale provides cover for more institutions to create similar programs and for those with existing programs to continue.”
Swensen Backed Farallon, Bracebridge, and Lone Pine Close to Day One
“David invested with hedge fund managers Tom Steyer at Farallon, Nancy Zimmerman at Bracebridge, and Steve Mandel at Lone Pine on or close to day one.”
Swensen Backed Hillhouse, Overlook, and Silchester When They Managed Almost Nothing
“He backed international equity managers Hill House, Overlook, and Silchester when they managed next to nothing, and he was perhaps the first institutional investor in a list of venture capital and private equity firms that constitute today's most well-known br…”
Yale's Initial Prospect Fellowship Cohort Comprises 30 to 60 Basis Points
“The fifty million dollar commitment to each manager is just 12 basis points of the Yale Endowment, and the initial cohort of two hundred and fifty million will comprise between 30 and 60 basis points in total.”
MIT and Duke Have Been More Active With Emerging Managers Than Yale
“Other organizations, like MIT under Seth Alexander and Duke under Neil Triplett, have been more active in the emerging manager space in recent years.”
Yale Does Not Demand Equity Economics in Spinout Investment Firms It Backs
“Spinouts of top investment managers may find Yale an attractive partner, especially knowing that Yale does not ask for economics in the newly formed business.”
Raise Global Conference Received 900 Emerging VC Applicants in 2024
“Similarly, the raise global conference received 900 applicants from emerging venture capital managers this year.”
Yale Prospect Fellowship Terms Beat Most Other Sources of Startup Capital
“Those trade-offs are more attractive than the asks from most other sources of startup capital.”
Texas TRS Graduated Just 12 of 190 Emerging Managers Over 20 Years
“Texas Teachers Employee Retirement System has run an emerging manager program for 20 years. Chief Investment Officer Jace Obby described on a recent Capital Allocators podcast that TRS has backed a 190 managers with a similar 25 to fifty million dollars. Jace …”
Seides Predicts 14 of 15 Yale Prospect Fellows Will Not Graduate
“The TRS data implies that one of Yale's lucky fellows will graduate to its core portfolio every three cohorts. In other words, 14 of 15 won't make it.”
Boutique Managers Historically Struggled to Survive When Yale Withdrew Capital
“When Yale pulled its capital from existing managers historically, many struggled to survive, and particularly those with the boutique single product firm that Yale favors.”
$50M Commitment Is Subscale for New PE, Real Estate, and Hedge Funds
“Even if Yale wants to continue the relationship, the fifty million dollar commitment is subscale for most strategies. An early stage venture capital or small cap public equity manager may be ready to roll with fifty million dollars, but managers of real estate…”