With the evolution of technology, academic institutions have been gradually shifting to include blockchain, according to The Inercept.com and cryptocurrency courses. Mostly they have stayed away from investment in the industry due to lack of jurisdiction and complex regulatory approach, but now it seems the Ivy League also wants a piece of the cryptocurrency action.
Yale University has reportedly backed a new multi-million dollar crypto-fund, called Paradigm. Co-founder Coinbase Fred Ehrsam has recently started the fund along with former Sequoia Capital partner Matt Huang and Charles Noyes, ex-employee of Pantera Capital.
Yale's Investment
The size of Yale's investment in the Paradigm fund couldn't be ascertained. The University has nearly $30 billion in the endowment headed by David Swensen and is among the few institutions to invest in the cryptocurrency market which has tumbled this year after a stunning 2017 rally.
While new institutional capital can reverse the crypto slump, it is the lack of supervisory regulation which deters new entrants. While a wave of institutional capital could reverse the crypto slump, new entrants are being deterred by market manipulation and a lack of regulation.
According to a survey done by consulting firm NEPC in February, 96 percent of endowments and foundations said they did not invest in electronic currencies like Bitcoin and had no plans to do so.
Investment Model
Swensen is considered a pioneer in institutional investing with experience of managing of the best-performing college endowment for three-decades. It makes his endorsement of cryptocurrency significant. His investment model has been tried to be emulated by endowments, which focuses on a long time horizon and committing capital to illiquid assets, which also includes private equity.
U.S college endowments hold close to $550 billion in assets with Yale at the second position in higher education, behind Harvard. Yale has an 11.8 percent return on average for past twenty years. For fiscal 2019, 60 percent of Yale's assets are to be channelized to alternative investments which include hedge funds, venture capital, and leveraged buyouts.
Early stage startup
Coin Telegraph .com not that according to co-founder Fred Ehrsam, the new fund, Paradigm. plans to invest in early-stage startups focused on cryptocurrency and blockchain technology. Yale has been in the news previously for investments in Puerto Rican bonds and other unusual ventures. This is the first time the University marks its entry into the blockchain and cryptocurrency space.
