Harvard’s $2.2B SpaceX Stake Shows How Elite Universities Invest in Tech

Last week, Harvard University disclosed a $2.2 billion stake in SpaceX held by Harvard Management Company, which manages the university’s massive endowment. Harvard also disclosed a roughly $350 million stake in Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker. University endowments, traditionally investing in diverse, low-risk assets, are moving closer to Silicon Valley by making direct investments in companies and backing venture capital funds.

Until Harvard’s recent disclosure, the most well-known example might be the University of Michigan’s $20 million investment in OpenAI when it was still a research nonprofit. That stake is estimated to be worth $2 billion today.

An endowment is a long-term pool of donated assets designed to support a university’s mission in perpetuity. Led by chief investment officers, universities generally invest those assets across stocks, bonds, real estate and private equity, seeking returns that can finance current operations while preserving the endowments for future generations.

The largest university endowments, such as Harvard ($57 billion in assets under management), Yale ($44 billion AUM), Stanford ($36.5 billion AUM) and Princeton ($34 billion AUM), allocate between 20 percent and 40 percent of their total portfolios to private equity and venture capital. This approach was pioneered by Yale Investments Office’s late chief investment officer David Swensen, who passed away in 2021. The Yale endowment is now led by Matt Mendelsohn. Harvard, the largest endowment in the U.S., is managed by N.P. “Narv” Narvekar.

In recent years, some universities have skipped VCs and backed startups directly. In April, Harvard Management Company opened a San Francisco office, its first domestic satellite location in years.

Universities’ connection to tech startups goes beyond financial returns and has long been rooted in research and innovation. Harvard economist Josh Lerner has noted that startups help bring cutting-edge research to the market and attract and retain faculty members. University research generated approximately 15,000 startups in the U.S. between 1996 and 2020, according to data cited by the Center for Strategic and International Studies. For example, Google’s founding technology emerged from research by Stanford graduate students Larry Page and Sergey Brin, whose work was supported in part by the National Science Foundation’s Digital Libraries Initiative.

Notable tech companies backed by university endowments

• Stripe: Backed early by Sequoia Capital and Andreessen Horowitz, which received significant backing from Yale, Harvard and Stanford.
• SpaceX: Also backed by Sequoia and Andreessen Horowitz early in its founding, in addition to Harvard’s recently disclosed direct investment.
• OpenAI: backed by Khosla Ventures and Thrive Capital, which rely heavily on capital commitments from endowments such as the University of Michigan, Yale and Princeton.
• Figma: backed by Index Ventures and Kleiner Perkins, which received institutional commitments from Harvard, Yale, and the University of California System.
• Anduril Industries: backed by Founders Fund and Andreessen Horowitz, which counted Princeton and the University of Michigan as key institutional backers.