Gaza protests prompt VCs to reconsider university investments
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Illustration: Brendan Lynch/Axios
Top venture capital firms and university endowments have a long and lucrative relationship. But it may be fraying.
The big picture: Endowments often get preferential access to VC funds managed by premier investors.
- Some of this is alumni largesse and/or inertia, but most is a genuine effort by VC firms to direct their (expected) returns toward where they can contribute to a greater good.
- University endowments, meanwhile, pitch themselves to VCs as that greater good, and often employ an allocation strategy that includes overweighted exposure to venture capital (i.e., the Yale Model).
Driving the news: On-campus protests and altercations over the war in Gaza are causing some VCs to question this status quo.
- This is part of a broader business blowback against pro-Palestinian rallies and statements by college students, specifically those that neglected to criticize Hamas for its terrorist attack on Israel, and also against responses by school administrators.
What they're saying: No venture capitalist wanted to go on the record, in part because the situation is so fluid and in part because they view it as counterproductive to publicly criticize their own investors. But Axios spoke with partners at several brand-name firms, and here's a quick sampling:
- "We invest in Israeli entrepreneurs. It feels crazy to then be sending returns from those investments to schools that are allowing their Jewish students to feel unsafe."
- "We've historically taken a 'moral high ground' approach of not taking money from most Middle Eastern sovereigns. I'm not necessarily saying that we stop accepting universities as LPs, but maybe we no longer differentiate in the same way."
Caveat: It's possible that some VCs view LP preference via the opposite geopolitical prism, but that message hasn't yet reached Axios.
The bottom line: No VC says that they've rejected a university endowment over this issue, nor that they definitely plan to do so, and it's possible that passions will eventually cool.
- That said, it's intensifying chatter that could alter one of the industry's most foundational funding pillars.
Go deeper: Universities struggle with responses as Israel-Hamas war reverberates
