University of Michigan

The University of Michigan manages one of the largest university endowments in the United States, overseen by its dedicated Investment Office. As of June 30, 2023, the endowment was valued at an impressive $17.9 billion, making it a significant institutional investor. The primary objective of the endowment is to generate long-term returns to support the university's academic mission, research initiatives, and student programs.

The Investment Office employs a highly diversified investment strategy across various asset classes, including public equities, fixed income, real estate, absolute return strategies, and private equity. Venture capital is a critical component of their private equity allocation, which, as of the same period, constituted approximately 33% of the total endowment portfolio. This substantial allocation underscores their commitment to high-growth, innovative sectors, albeit through an indirect approach.

Unlike traditional venture capital firms that invest directly into startups, the University of Michigan's endowment primarily functions as a Limited Partner (LP). This means their investment strategy in the venture capital space involves committing capital to established and emerging venture capital funds. These funds, in turn, identify and invest directly in promising startups. The University of Michigan seeks to partner with top-tier fund managers who possess deep industry expertise and a strong track record of generating superior returns.

Their role as an LP allows them to gain diversified exposure to the venture ecosystem without the operational complexities of direct startup investing. This strategy enables them to support innovation across various stages and sectors through the expertise of their chosen fund managers. The endowment's long-term horizon aligns well with the patient capital required for venture capital investments, aiming to capture the significant upside potential offered by successful startups over time.