 | The University of North Carolina's endowment reported a 142% return from its venture capital holdings.
( Ryan Herron/Getty Images) | | | Some of America's largest university endowments unveiled eye-popping annual gains in the past week. Duke University reported a 56% return for the fiscal year ended June 30. Washington University in St. Louis generated a 65% gain.
These top-performing endowments can thank alternative assets—in particular, venture capital—for the banner year, which is said to be the best since 1986. But that short-term success could prove to be a double-edged sword.
I'm James Thorne, and this is the Weekend Pitch. You can reach me at james.thorne@pitchbook.com or follow me on Twitter @jamescthorne.
University endowments face an embarrassment of riches Endowments performed well across the board, with the median return coming in at 27% for the period, according to Wilshire Trust Universe Comparison Service. Those funds managing more than $500 million did much better, notching median gains of 34%, on the back of private investments.
The VC holdings of the University of North Carolina's nearly $10 billion endowment returned 142% for the fiscal year, Pensions & Investments reported. The endowment gained 42.3% overall, and its private equity holdings came in at 44%.
On one hand, news of this bonanza bolsters the case for the endowment model that prioritizes alternative investments. It also provides a fitting coda to the legacy of David Swensen, the highly influential former Yale endowment chief who died earlier this year.
But the returns may become a headache for asset managers of endowments: The growth could be more mirage than oasis, and it provides ammunition to the endowment system's varied critics. | | | | | | | |
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| Breaking down the business software boom | | As unprecedented demand for revamps of tech stacks and investment in digitization continues, business software companies have enjoyed a massive influx of private capital.
However, with rapid growth comes significant challenges. The latest edition in Deloitte's Road to Next series breaks down how companies are grappling with these changes, including: - Key findings from analysis of investment trends
- Recent regulatory changes with significant tax implications
- Which tech stack segments are enjoying the most growth, and attendant hybrid workflow considerations
Read it now | | | | | | | |
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 | | (z_wei/Getty Images) | | | | "Venture debt usually takes between six to eight weeks to get set up. ... It involves multiple processes of pitching the company, sharing data, and then sharing more data, and then going through another committee. It feels a lot like raising a round of equity, but it is even more intensive for funding. It's a process that nobody likes."
—Miguel Fernandez, co-founder and CEO of Capchase, which helps companies finance growth based on future revenue payments.
On this week's episode of "In Visible Capital," Fernandez and QED Investors partner Matt Burton discuss how non-dilutive financing options may spur competition among VCs. | | | | | |  | | (cako74/Getty Images) | | | | Warby Parker made its NYSE debut on Wednesday, more than a decade after its founding. The eyewear maker proved to be a highly influential brand whose direct-to-consumer business model was soon applied to staple goods from mattresses to sneakers.
The company ended its first day of trading with a $6.8 billion market cap on a fully diluted basis—more than double its last private valuation in 2020.
We took a deep dive into the company’s road to Wall Street, its rise in valuation and some key financial measures. Check out our visual timeline. | | | | | | Q1 is proving to be an outlier quarter for SPAC IPOs. The sprint has now slowed to a moderate pace, with 106 offerings raising a combined $20.9 billion in Q2 2021, according to PitchBook data.
Still, our analysts argue that the inefficiency of the pricing mechanism and the high cost of the traditional IPO process create a strong enough push to sustain the need for SPACs in the current ecosystem.
However, investors' appetite for SPAC deals may still be dampened by existential threats, such as lackluster aftermarket performance, litigation and regulatory headwinds. In fact, a range of factors can intensify the downward pressure on new SPAC IPO issuance. | | | | | |  | | (steved_np3/Getty Images) | | | | … That the cumulative number of unicorns across Europe has roughly tripled since the start of 2018? The European VC ecosystem saw the aggregate value of unicorns skyrocket to over €253 billion through Q2 2021, more than double the €107 billion recorded in all of last year, according to PitchBook data.
From record-low interest rates to rising participation by nontraditional investors, read about the factors driving valuation growth among Europe's venture-backed unicorns in our recent analyst note. | | | | | | Greenland is home to rare earth elements needed for electric cars and wind turbines. The world badly wants the island's minerals—but Greenlanders are wary. [The New York Times]
Mercy Hospital, a 168-year-old anchor on Chicago's South Side, was about to succumb to the brutal economics of US health care. Then an unlikely savior appeared, with a second chance for $1. [Bloomberg]
The past five months have marked a turning point in Apple's traditionally top-down company culture. Will it last? [The Verge]
China's new reality is rife with danger, as President Xi Jinping wages a campaign to purge the country of capitalist excess. [The Economist]
Would moviegoers pay $25 per ticket if they got unlimited food? One theater decided to find out. [The Wall Street Journal]
Why Peyton and Eli Manning can't save the NFL. [The Atlantic] | | | | | | This edition of The Weekend Pitch was written by James Thorne and Priyamvada Mathur. It was edited by Alexander Davis, Kate Rainey and Sam Steele.
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