Finance

Yale’s new 37-year-old chief investor of its $31 billion endowment tells us how he selects VCs

  • Matthew Mendelsohn has landed one of the most coveted roles in investing: Yale’s new chief investor.
  • Mendelsohn told Insider he invests in people first and prizes openness to new ideas when choosing VCs.
  • He declined to say if he will increase Yale’s venture allocation.

Ever since the Yale endowment’s legendary chief investment officer David Swensen died from cancer in May, the investment community’s biggest guessing game has been who Yale would choose to fill Swensen’s very big shoes.

In the end, Yale chose Matthew Mendelsohn – a young alumnus who has devoted his entire career studying at Swensen’s knee. Mendelsohn oversaw Yale’s venture portfolio, which the university revealed Tuesday represents a quarter of its entire fund and has returned an average of 21.6% a year, well above the 12.4% of the endowment as a whole.

Mendelsohn is just 37 years old, though that is six years older than Swensen was when he became CIO in 1985 – the year after Mendelsohn was born –with relatively scant investment experience.

“Mendelsohn was the odds-on favorite,” said Charles Skorina, an executive recruiter who has led dozens of CIO searches. “Culture, institutional memory, and tradition are part of the Yale Investment Office’s DNA and key to their endowment performance.”

The choice of Mendelsohn says a lot about how important venture investing has become for Yale and other top endowments – and how successful that part of the portfolio has been over the last decade.

Mendelsohn declined to tell Insider if he will increase Yale’s venture allocation, even though running that part of the fund was his road to success. But he did share what he looks for in venture funds.

“We invest in people, first,” Mendelsohn wrote in an e-mail. “That means an emphasis on intelligence, network, partnership, long-term thinking, openness to new ideas, and overall ability to identify talented entrepreneurs and technology.”

Yale has backed top venture firms such as Andreessen Horowitz, Benchmark, and Greylock Partners, and many other endowments and other institutional investors follow its lead on where to invest.

Mendelsohn’s importance in the venture world was already high and now it is even loftier, as evidenced by the number of VCs congratulating him on his promotion.

—tyler hogge 🎯 (@thogge) August 24, 2021

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