Rethinking Asset Allocation, The Past Present and Future of Venture Capital | Dan Feder, University of Michigan

Dan Feder is a Senior Managing Director of Investments at the University of Michigan’s $18 billion endowment.

Our two hour conversation talks through the past, present, and future of all things venture capital, and investing more broadly.

Dan lays out the case for why most institutional investors should change how they approach asset allocation, why risk and uncertainty are not the same, the importance of relevance and independent thinking, advice for fund managers raising from institutional LP’s, the trend of VC’s rolling up services businesses, and what he learned from beating Lance Armstrong in a race.

Thanks to Chris Douvos @ Ahoy Capital and Adam Kurkiewicz at WashU for their brainstorming topics for Dan!

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Timestamps:

(5:50) Beating Lance Armstrong in a race

(8:05) “The will to win is nothing without the will to prepare”

(10:39) Why investors need to re-think asset allocation

(22:31) Difference between risk and uncertainty

(29:26) How endowments work

(33:12) Endowment portfolio construction

(40:47) From law, to industrial buyouts, to venture

(49:13) Narrowing scope to increase returns

(54:54) Why career planning as an LP is hard

(58:24) VC in the 00’s

(1:08:18) Venture vs Adventure Capital

(1:15:16) VC’s rolling up legacy industries

(1:20:17) Importance of relevance

(1:26:25) Traits of the top investors

(1:28:25) Importance of trust in institutional LP fundraising

(1:32:54) Venture is the most competitive ass class

(1:35:37) Why venture firms do not persist over time

(1:38:27) How venture will change going forward

(1:43:37) The Newman Cycle

Referenced

A Sense of Where You Are by John McPhee: https://www.amazon.com/Sense-Where-You-Are-Princeton/dp/0374526893

Risk Uncertainty and Profit by Frank Knight: https://www.amazon.com/Risk-Uncertainty-Profit-Frank-Knight/dp/1614276390

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