Dear reader,
The Realistic Optimist is back from its summer publishing break.
Before we unveil today's article, a small announcement. RO Correspondent James Mahon recently published an RO Long Read series detailing the links between Japanese investors and African startups. To write it, James spent months researching the topic and speaking to relevant actors.
If you enjoyed the series (or the topic is of interest), James will be holding a virtual Q&A next week, hosted by RO Ambassador Phylis Atieno. He'll go over his main findings, and will be happy to answer questions. You can sign up for it here.
Today's article is a special one. Many RO readers are prospective or existing VCs. Successfully raising from LPs is table-stakes for their fund to see the light of day. Yet, we felt that articles deciphering how LPs think (indispensable information if one wants to raise from them) were rare.
LPs are a heterogenous bunch. They include HNWIs, corporates, sovereign wealth funds, DFIs, family offices... In this week's RO article, we decided to dive into another type: university endowments.
Enjoy.
Biography
Katherine Wyble and Greg Elkins are managing directors at the University of Wisconsin’s endowment fund, WISIMCO. As of their most recent report (2024-2025), WISIMCO holds approximately between $5B and $6B in assets.
In this exclusive RO interview, Katherine and Greg explain the purpose of an endowment fund, what they invest in, how they think about VC, and dive into their emerging market allocations.
What is WISIMCO’s investment mandate?
Similar to other endowment funds, WISIMCO invests the money donated to the University of Wisconsin (mostly by its alumni).
Our investment mandate is simple: we ought to generate sufficient returns to preserve the principal of alumni donations, considering inflation. On top of that, we aim to generate additional returns that the university can use. 4.5% of the total endowment value is given back to the university every year, which they use for operating expenses or investments.
This makes us a tad different from other LPs and influences our investment strategy. Not only do we always need sufficient capital to meet that obligation, but the pay-out combined with our mandate to beat inflation means we shoot for ~9% nominal return per year. This informs our equity orientation and involvement in private markets, which we’ll cover below.
Source: WISIMCO financial report 2024-2025
Can you share some numbers regarding WISIMCO’s size, performance, and asset allocation?