The prestigious University of Michigan’s financial endowment fund has joined a growing number of institutional investors that have made substantial investments in the nascent digital asset market.
Similar to how many other new investors gain exposure to the cryptoasset market, the University of Michigan’s crypto-related endowment is backed by giant venture capital firm, Andreessen Horowitz. Although not as large as Yale’s $25.4 billion endowment (another top-ranked university fund that invested in Andreessen Horowitz’s $300 million crypto fund), University of Michigan’s $11.9 billion endowment consists of thousands of individual contributions.
Andreessen Horowitz Manages Crypto Separately From Other Investments
Proceeds earned from the multi-billion dollar endowment are used to pay for various university-related expenses such as grants and scholarships, professorships, and other educational initiatives. As mentioned in an “item for information” document posted on University of Michigan’s official website (on February 21st), the higher education institution’s endowment will increase its investment in a cryptocurrency venture fund.
In June 2018, the University of Michigan had invested $3 million in a crypto network fund called CNK Fund I, L.P.. This fund focuses on “technology companies across the spectrum of seed, venture, and growth stage opportunities.” Moreover, Andreessen Horowitz (or a16z) reportedly decided to allocate a significant portion of its investments to a cryptocurrency-focused fund because the VC firm believes digital assets have “become an important area of innovation and entrepreneurship that warrants focused attention.”
As explained in University of Michigan’s document:
As opportunities related to cryptonetworks transition from being undefined to becoming more visible and sharply defined, the need for a separate thematic fund may recede.
US Pension Funds Participate In $40 Million Crypto Fund
However, the announcement noted that the current regulatory framework for cryptocurrency-related projects is “potentially more cumbersome” than the more traditional types of IT investment funds. At present, the crypto space is categorized as a “distinct type of technology” by developers, funding sources, and businesses, the University of Michigan’s notice stated. This is why Andreessen Horowitz is managing its crypto-related investments through a separate fund (for now).
On February 12th, Morgan Creek Digital Assets announced that it had managed to secure $40 million for a new VC fund focused on crypto and blockchain-related initiatives. For the first time, several notable American public sector pensions participated in Morgan Creek’s Blockchain Opportunities Fund. They included funds invested by the FairFax County, Virginia Police Officer’s Retirement System, and the Employees’ Retirement System for government employees.