The Wall Street Journal just published a piece on the changes in composition of the investors who invest in VC funds. In 2009 venture capitalists got money from all the traditional sources (endowments, pension funds, insurance/financial investors, fund of funds, etc.) However, in 2009 there was a major change – “Endowments and foundations saw their share of the overall venture capital pool fall to 3.2% in 2009 from 13.1% in 2008,” according to the report.
Obviously we all read about how stressed for cash schools and other foundations were last year, which probably caused most of this drop.
Endowments and foundations are the limited partners (investors in funds) that VCs like to brag about. “Yeah, Harvard and Yale are invested in our fund.” These LP’s are not only high profile, but are usually also considered the most sophisticated investors. If these groups don’t come back from the dead in the next couple of years and recommit to the venture asset class, will the industry be forced to dramatically shrink? (The venture industry size isn’t something I have time to blog about right now, sorry!)
