America’s third-oldest educational institution, Yale, is reportedly one of the investors in the Paradigm cryptocurrency fund started by Coinbase co-founder Fred Ehrsam.
Paradigm, also founded by Sequoia Capital partner Matt Huang and Charles Noyes, previously of Pantera Capital, has raised $400 million. The fund will invest in early-stage blockchain and cryptocurrency projects and exchanges.
Bloomberg, citing an unnamed source, reports that Yale University is one of a few large institutions to invest in the Paradigm fund.
Yale has a $30 billion endowment and is known for investing in alternative funds. The university will be targeting 60% of its investments towards alternatives in 2019, including to venture capital, hedge funds, and now cryptocurrency. Yale has invested in Andreessen Horowitz for a number of years and has also committed capital to the firm’s $300 million cryptocurrency fund.
Bloomberg was unable to confirm how much Yale has committed to Paradigm or gain comment from the university.
An Institutional Move?
As cryptocurrency markets wait for a boost from institutional investors, the university’s commitment is a significant vote of confidence for the industry.
Yale’s endowment is headed by David Swensen, who has been called a “pioneer” in institutional investing after managing Yale’s investments, some of the best performing in college investments, for 30 years. Yale’s assets return nearly 12% on average and have for the past 20 years, according to Bloomberg.
America’s colleges and universities have endowments totaling around $550 billion. Yale’s $30 billion in assets is the second-largest value of all U.S higher education institutions.
Other endowment managers are known to copy Swensen in his strategy of committing capital to more illiquid assets and private equity. He’s known at Yale as its “in-house Warren Buffet”.
CNBC quotes Bill Barhydt, CEO of cryptocurrency exchange Abra, who says institutional investors are afraid to be the first to take the leap into cryptocurrencies and have to explain themselves, adding:
“That’s the fear vs. greed of institutional investing. There’s a herd mentality there as much as there is in retail investing.”
Could Yale’s investment be a sign of much needed institutional interest for the cryptocurrency markets—and an investment that others will follow?
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