Inside the Mind of a University Endowment Manager | Dan Feder, University of Michigan | Ep. 14
Dan Feder (guest), Jack Altman (host)
In this episode of Uncapped with Jack Altman, featuring Dan Feder and Jack Altman, Inside the Mind of a University Endowment Manager | Dan Feder, University of Michigan | Ep. 14 explores dan Feder explains how endowments choose managers and venture exposure Feder frames endowment management as serving thousands of underlying endowments, with core goals of supporting steady spending, keeping up with inflation, and preserving intergenerational equity.
Dan Feder explains how endowments choose managers and venture exposure
Feder frames endowment management as serving thousands of underlying endowments, with core goals of supporting steady spending, keeping up with inflation, and preserving intergenerational equity.
He distinguishes asset allocation (a largely risk/volatility-based, backward-looking optimization) from true investing—especially in venture, where the edge comes from uncertainty and “unknown unknowns,” not measurable risk.
Feder argues venture shouldn’t be treated as a clean “asset class,” and proposes separating “adventure capital” (uncertain, ambitious work) from routine “capital for ventures” (later-stage financing).
He discusses how career-path incentives and herd dynamics push LPs toward short-term, narrative-driven decisions, and outlines Michigan’s investing framework based on institutional advantages: access, time horizon, and occasional ability to influence outcomes.
Key Takeaways
Endowments are mutual-fund-like pools, not a single monolith.
Michigan’s endowment pool aggregates ~13,000 individual endowments; each holds “units” in the pool, while the pool targets stable long-term support for many distinct programs.
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The endowment mandate implies an equity orientation.
To fund ~4–5% annual spending plus higher-ed inflation with tolerable volatility “forever,” a liquid baseline often starts with public equities, then diversifies into other return streams to manage risk.
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Asset allocation is a risk-based, behaviorally useful constraint—especially in venture.
Mean-variance style allocation uses historical correlations/volatility to set guardrails, helping prevent overconfidence from driving too much (or too little) exposure to highly narrative asset classes.
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Venture’s durable edge comes from uncertainty, not measurable risk.
Feder draws on Frank Knight: risk is probabilistic/knowable, while uncertainty contains “unknown unknowns. ...
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“Venture capital” blends two different activities that should be separated conceptually.
Feder suggests distinguishing “adventure capital” (truly ambitious, not-knowable paths) from “capital for ventures” (needed financing for companies that are no longer adventurous). ...
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Incentives push LP teams toward short-term outcomes and herding.
As endowment management professionalized into a career ladder, people increasingly need visible near-term “relevance” (marks, associations with hot names), which can shift behavior from input-quality to outcome-chasing.
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Michigan’s framework: invest where institutional advantages apply.
Feder highlights three advantages—access (information/people), long time horizon, and occasional high-leverage influence. ...
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Concentration is a tool—but sometimes backing fewer people across more firms is better.
If only a subset of partners at a large firm drive the true edge, investing in the full platform may dilute exposure; allocating to smaller teams or solos can increase “fidelity” to the productive investors.
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Fund size isn’t inherently good or bad; it’s an outcome of strategy.
Feder challenges the cliché “fund size is the enemy,” noting funds can be too big (dilution/quality decay) or too small (can’t lead, can’t build meaningful ownership). ...
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Manager selection is about getting to underlying company exposure efficiently.
Feder’s goal isn’t “owning managers,” but accessing the best underlying companies. ...
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Notable Quotes
““I’d rather hire somebody with a fast processor than a full hard drive.””
— Dan Feder
““Things that are not known or not knowable is the realm of uncertainty, and that is where I think venture capital has its real power.””
— Dan Feder
““The notion that venture capital is an asset class in the first place bothers me because I don’t think it is.””
— Dan Feder
““In investing, you don’t have to be right about everything. You just have to be right enough about the things that matter.””
— Dan Feder
““LPs love a good story, and GPs love to tell a good story.””
— Dan Feder
Questions Answered in This Episode
How does Michigan translate the “8-ish percent nominal forever” target into concrete rebalancing rules during drawdowns or frothy markets?
Feder frames endowment management as serving thousands of underlying endowments, with core goals of supporting steady spending, keeping up with inflation, and preserving intergenerational equity.
Get the full analysis with uListen AI
Can you give a specific example of an “unknown unknown” investment where your informational edge (or network) clearly mattered?
He distinguishes asset allocation (a largely risk/volatility-based, backward-looking optimization) from true investing—especially in venture, where the edge comes from uncertainty and “unknown unknowns,” not measurable risk.
Get the full analysis with uListen AI
In practice, how do you distinguish “adventure capital” from “capital for ventures” when a company is scaling but still doing technically ambitious work?
Feder argues venture shouldn’t be treated as a clean “asset class,” and proposes separating “adventure capital” (uncertain, ambitious work) from routine “capital for ventures” (later-stage financing).
Get the full analysis with uListen AI
What are the most common ways LP career incentives distort venture manager selection—and how do you design roles/comp to counteract that?
He discusses how career-path incentives and herd dynamics push LPs toward short-term, narrative-driven decisions, and outlines Michigan’s investing framework based on institutional advantages: access, time horizon, and occasional ability to influence outcomes.
Get the full analysis with uListen AI
You mentioned using only introductions and qualified referrals—how do you avoid missing emerging managers outside the established network graph?
Get the full analysis with uListen AI
Transcript Preview
in the phraseology that Donald Rumsfeld made popular, there are known knowns, unknown knowns, known unknowns, and unknown unknowns.
Mm-hmm.
And things that are not known or not knowable is, is the realm of uncertainty, and that is where I think venture capital has its real power. [upbeat music]
All right. Today, I'm here with Dan Feder from the University of Michigan, and this is the first time that we've ever gotten to have an LP on the podcast, and you're one of the most interesting, thoughtful people that I've gotten to learn from in this industry, and so I'm really excited to get to do this with you today.
Well, thanks for having me, but first of all, you have to get out more then.
I need to get out more.
Yeah.
That's a problem for me. My listeners probably are gonna be less versed in sort of LP land than sort of VCs or founders. So could you start by just giving a little background? It doesn't have to be long, but just kind of orient us to sort of a little bit about you and how you've gotten to where you are.
Well, it's a long story, so I'll keep it really, really short. I started out my career as a lawyer, um, so I had no idea about being an investor and certainly had no idea about what an endowment was or endowment management. And I got to endowment management, uh, really by accident. I was having lunch with a private equity manager who took a liking to me, and he said, "I think you'd like endowment management." This is in, uh, the year two thousand. And I said, "That's fantastic. What's that?" And he, like I said, super kind private equity manager, great investor, named Paul Levy, introduced me to, um, a person for whom he was doing guest lecturing at Yale, and that happened to be Dave Swensen. And Dave was also really, really kind, and he didn't have anything at Yale, and he introduced me to Andy Golden at Princeton. And at that time, Andy was the CIO at Princeton and was bringing all of the non-marketable asset classes back in-house. They had been outsourced. And we just got to know each other over a period of months. I had zero experience doing what he wanted someone to do. And, um, at the end of getting to know him and him getting to know me, he brought me in to lead venture and private equity at Princeton, and that, in and of itself, informs a lot of how I think about hiring people, uh, working with fund managers and investing because when we got toward the end of the process, I just said: "Look, you know, I don't fit the spec of what you're looking for. I'm happy to come in at a lower level and see if I'm right for you and you're... You know, and this is right for me." And he said, "It's fine. I'd rather hire somebody with a, a fast processor than a full hard drive." And that has stuck with me ever since then, and it informs a lot of my thinking and a lot of what I learned there in terms of thinking about investing, um, has informed everything that I've done, from Princeton to WashU, where I was, uh, in a similar role, and now at the University of Michigan, and then a couple of stops along the way.
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