Key Takeaways
- • Washington University endowment CIO Scott Wilson says the $20B endowment's outperformance comes from direct and co-investment deals, not fund selection; without them, he says, it would be "right at the average of our peer group."
- • WashU turned over more than 75% of its private portfolio in roughly 18 months and redeemed all 36–37 hedge funds after Wilson's arrival nine years ago.
- • SpaceX at one point exceeded 20% of the entire endowment, a position the team held through several continuation vehicles into the IPO.
- • Roughly half of the private book sits in directs and co-investments, with a target of 80%; the team spends 80–90% of its time meeting companies rather than fund managers.
- • WashU adds one or two new funds a year on a "one in, one out" basis and avoids any fund above $10 billion.
Summary
Washington University CIO Scott Wilson says the university's endowment owes its top-tier performance to direct and co-investment deals rather than fund selection, according to remarks he made on the 20VC podcast as reported by BigGo Finance. Wilson, who has run the endowment for nine years, says that without those deals WashU would sit "right at the average of our peer group." The endowment has grown from just under $8 billion at his start to just under $20 billion today, generating roughly $17 billion in profits on the original $8 billion while paying out about $5 billion to the university.
The portfolio overhaul was extensive. In his first week Wilson filed redemptions for more than half the portfolio and liquidated all 36–37 hedge funds, though he disputes the "fire sale" characterization after studying the book for a couple of months. Over roughly 18 months, more than 75% of the private portfolio was turned over through secondary sales. The board gave his team three years to demonstrate performance improvement. The endowment now targets roughly 50/50 public and private allocations and, absent a 5% payout requirement, would run 70–80% private. Wilson argues that public and private assets differ mainly in how often they are marked, and notes privates compounded in the low-to-mid 20s over the last decade versus about 10% for public equities.
WashU has no separate direct-investing team; every investment professional is a generalist. Deals typically start from a partner's conviction, after which the team independently verifies the thesis and underwrites the company, invests in roughly 0.1% of what it sees, and often begins with a $50 million co-investment check. Single-name governance requires board notification above 2–3% of the portfolio at cost and board approval at 4%, though the team has wide latitude to concentrate. That latitude allowed SpaceX to exceed 20% of the endowment at one point. Wilson says the team has been gradually selling SpaceX after the IPO, citing fiduciary duty, and holds some of Cerebras, where he says the valuation is hard to justify on the last 12 months of KPIs, leaving holders "betting on the come."
Wilson acknowledges mistakes, chiefly failing to add capital to winners because their growing size made them look expensive in the portfolio. He also cites a 2020 secondary sale the endowment chose not to complete, after which venture markets peaked and reversed, and two high-conviction direct losses in manufacturing companies. On fund selection, WashU holds roughly 20–30 funds, avoids any fund above $10 billion, and declines to re-up when valuation discipline is lacking. He argues that look-through exposure, not fund performance, is the unit of analysis for the portfolio.
The portfolio overhaul was extensive. In his first week Wilson filed redemptions for more than half the portfolio and liquidated all 36–37 hedge funds, though he disputes the "fire sale" characterization after studying the book for a couple of months. Over roughly 18 months, more than 75% of the private portfolio was turned over through secondary sales. The board gave his team three years to demonstrate performance improvement. The endowment now targets roughly 50/50 public and private allocations and, absent a 5% payout requirement, would run 70–80% private. Wilson argues that public and private assets differ mainly in how often they are marked, and notes privates compounded in the low-to-mid 20s over the last decade versus about 10% for public equities.
WashU has no separate direct-investing team; every investment professional is a generalist. Deals typically start from a partner's conviction, after which the team independently verifies the thesis and underwrites the company, invests in roughly 0.1% of what it sees, and often begins with a $50 million co-investment check. Single-name governance requires board notification above 2–3% of the portfolio at cost and board approval at 4%, though the team has wide latitude to concentrate. That latitude allowed SpaceX to exceed 20% of the endowment at one point. Wilson says the team has been gradually selling SpaceX after the IPO, citing fiduciary duty, and holds some of Cerebras, where he says the valuation is hard to justify on the last 12 months of KPIs, leaving holders "betting on the come."
Wilson acknowledges mistakes, chiefly failing to add capital to winners because their growing size made them look expensive in the portfolio. He also cites a 2020 secondary sale the endowment chose not to complete, after which venture markets peaked and reversed, and two high-conviction direct losses in manufacturing companies. On fund selection, WashU holds roughly 20–30 funds, avoids any fund above $10 billion, and declines to re-up when valuation discipline is lacking. He argues that look-through exposure, not fund performance, is the unit of analysis for the portfolio.
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