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Yale University’s latest alternative investment? No, not Puerto Rican bonds again. This year, Yale is taking the plunge into cryptocurrencies.
The school with the second largest endowment recently helped a new digital asset fund raise $400 million, according to Bloomberg. The fund is called Paradigm and it was started by the co-founder of Coinbase, Fred Ehrsam with former Sequoia Capital partner Matt Huang. They were joined by Charles Noyes, an ex-employee of Pantera Capital.
Brief - Profile - Year - Noyes - June
We did a brief profile of 19 year old Noyes back in June of this year, highlighting this new project and some of the partners he was working with.
The unorthodox capital allocation move is part of a larger diversification strategy that will see almost 60% of Yale's assets in 2019 targeted for alternative investments. These include venture capital, hedge funds and leveraged buyouts. And now, bitcoin too.
Yale - Endowment - Investor - David - Swensen
Yale's nearly $30 billion endowment, managed by iconic investor David Swensen, is one of the only few major institutions that has invested in the cryptocurrency market which has fallen hard this year after an incredible run in 2017. Bloomberg, which first reported this allocation, was unable to find out Yale's total investment in the new fund.
Certainly, institutional capital could help stabilize the crypto market, which after a furious selloff in early 2018, has not only stabilized but shown a dramatic decline in volatility.
Lack - Regulation - Incidents - Theft - Investors
However, the lack of regulation - and occasional staggering incidents of theft - has keeping major investors out of the market. According to Bloomberg, 96% of endowments and foundations said they didn’t want to invest in the burgeoning industry. Regulatory concerns and market manipulation concerns still loom large over the industry. However, now that respected endowments are making inroads, could this be just the "adoption" sign that cryptocurrency fans have en waiting or?
Swensen’s endorsement of crypto assets is...
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