How LPs Allocate to Venture in 2026: What They Want, What They Don’t | Baylor University CIO
Baylor University CIO David Morehead talks with Harry Stebbings about how endowments should allocate to venture and private equity, focusing on capital velocity over absolute returns.
The gist
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Morehead says a 3x return in 6 years, redeployed twice, produces 27x over 18 years and beats a 15x VC fund that takes 15 years.
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He sizes positions by deciding how much he wants in each portfolio company first, then works backward to the fund commitment amount.
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When markets drop 20%, Morehead deploys only 20% of dry powder, adding another 20% at each 10% further decline to avoid going all-in too early.
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If a manager drifts from their stated strategy without discussion, Morehead says to replace them regardless of short-term performance.
Also mentioned
6:51
Nvidia
· "Say we have Nvidia in the portfolio, and then the next marginal manager wants to add Nvidia to his or her..."
12:26
Growth equity
· "The single reason that privates exist is to make money. Period. We're really focusing today on VC,..."
12:48
Founders Fund
· "How do you think about trying to get into the big names, the Sequoias, the Benchmarks, the Founders Funds?"
16:01
Velocity of capital
· "There's a rule in our office that you're not allowed to talk about returns without also talking about time...."
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