Rethinking Asset Allocation, The Past Present and Future of Venture Capital | Dan Feder, University of Michigan

The Peel with Turner Novak

Turner Novak

Technology

4.6 • 11 Ratings

🗓️ 18 September 2025

⏱️ 112 minutes

🔗️ Recording | iTunes | RSS

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Summary

Dan Feder is a Senior Managing Director of Investments at the University of Michigan’s $18 billion endowment.

Our two hour conversation talks through the past, present, and future of all things venture capital, and investing more broadly.

Dan lays out the case for why most institutional investors should change how they approach asset allocation, why risk and uncertainty are not the same, the importance of relevance and independent thinking, advice for fund managers raising from institutional LP’s, the trend of VC’s rolling up services businesses, and what he learned from beating Lance Armstrong in a race.

Thanks to Chris Douvos @ Ahoy Capital and Adam Kurkiewicz at WashU for their brainstorming topics for Dan!

Special thanks to Ramp for supporting this episode. It's the corporate card and expense management platform used by over 40,000 companies, like Shopify, CBRE and Stripe. Time is money. Save both with Ramp. Get $250 for signing-up here: https://ramp.com/ThePeel

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Timestamps:

(5:50) Beating Lance Armstrong in a race

(8:05) “The will to win is nothing without the will to prepare”

(10:39) Why investors need to re-think asset allocation

(22:31) Difference between risk and uncertainty

(29:26) How endowments work

(33:12) Endowment portfolio construction

(40:47) From law, to industrial buyouts, to venture

(49:13) Narrowing scope to increase returns

(54:54) Why career planning as an LP is hard

(58:24) VC in the 00’s

(1:08:18) Venture vs Adventure Capital

(1:15:16) VC’s rolling up legacy industries

(1:20:17) Importance of relevance

(1:26:25) Traits of the top investors

(1:28:25) Importance of trust in institutional LP fundraising

(1:32:54) Venture is the most competitive ass class

(1:35:37) Why venture firms do not persist over time

(1:38:27) How venture will change going forward

(1:43:37) The Newman Cycle

Referenced

A Sense of Where You Are by John McPhee: https://www.amazon.com/Sense-Where-You-Are-Princeton/dp/0374526893

Risk Uncertainty and Profit by Frank Knight: https://www.amazon.com/Risk-Uncertainty-Profit-Frank-Knight/dp/1614276390

Follow Dan

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LinkedIn: https://www.linkedin.com/in/danfeder

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Transcript

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0:00.0	What I think needs to change, or I don't think, I'm convinced needs to change, is that the reliance on acid allocation as the thing around...
0:11.0	Is the driver of alpha?
0:12.3	The driver of what the expected returns are around reducing risk per unit of return.
0:21.1	That all still valid.
0:22.4	But what is missing or what's being underappreciated, I think,
0:26.2	is that investors who are focused on asset allocation
0:31.1	are not taking full account of where they are.
0:34.8	What are their advantages and disadvantages as investors?
0:39.5	And playing for those advantages and avoiding the disadvantages. Welcome to the Peele. I'm your host, Turner Novak, founder of
0:45.1	Banana Capital. Today's guest is Dan Fader, senior managing director of investments at the University of
0:49.7	Michigan. Our two-hour conversation talks through the past, present, and future of all things, venture capital,
0:55.0	and investing more broadly. And Dan lays out the case for why most institutional investors
0:59.2	should change how they approach asset allocation.
1:01.6	The realm of uncertainty is the only place in which an investor can reliably make actual
1:08.5	economic profit. Everything else is risk-based. Risk is different than uncertainty.
1:12.4	We talk about how endowment management and venture capital as an asset class has changed over
1:17.0	the past 25 years. How many firms really matter in venture capital? And the answer was always
1:23.6	sort of 10 to 12. The importance of relevance and independent thinking. People think that contrarian just means doing the opposite or whatever else is doing. That it can't be what it is because that means that you're just letting everybody else tell you what to do. His opinion on the markets today, advice for fund managers raising from institutional LPs, the trend of VC's rolling up services businesses. There's, I think, a trap in there for that idea.
1:44.8	What's the trap?
1:46.2	And why he learned from competing Lance Armstrong in a race.
1:48.8	Being competitive or being competitive on the day of a race is not enough.
1:54.4	And that what really matters are the inputs into what happens on race day.
	...

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