Key Takeaways
- • Brown Advisory, managing $12 billion in assets for endowments and foundations, reports "stronger demand than ever" for venture capital fund allocations among its LP base as of February 2026.
- • Endowment and foundation LPs are deliberately shifting capital allocation toward venture to hedge against concentrated artificial intelligence exposure in public equity markets, seeking diversification of high-growth assets.
- • Private equity and venture capital allocations have increased across all size segments within the OCIO (Outsourced Chief Investment Officer) analytics universe, with average allocations rising from 5.8% in Q1 2021 to substantially higher levels by 2026.
- • Smaller endowments and foundations with assets between $101 million and $250 million are driving OCIO adoption and deepening private markets commitments due to resource constraints and staffing limitations.
- • The venture capital access gap persists: endowments under $1 billion maintain allocations near 3% to venture, significantly below larger institutional peers, despite documented long-run return premiums in academic endowment studies.
Summary
Institutional investors managing endowments and foundations are increasing venture capital allocations at an accelerated pace, according to leadership at Brown Advisory, a major outsourced CIO platform overseeing $12 billion in assets for nonprofit institutions. The firm notes unprecedented momentum in VC demand driven by a critical strategic consideration: LPs are concerned about excessive concentration of artificial intelligence exposure within public equity markets and view venture as a natural diversification mechanism for high-growth portfolio components.
This shift reflects a broader structural trend within the endowment and foundation universe. Private markets allocations—encompassing both private equity and venture capital—have expanded across every asset size segment tracked by OCIO analytics platforms. Average allocations to private equity and venture combined have grown from 5.8% of portfolios in the first quarter of 2021 to substantially elevated levels by 2026, representing a material reallocation of capital from traditional public market strategies.
The adoption of outsourced CIO services has become particularly pronounced among smaller institutions. Endowments and foundations with assets between $101 million and $250 million are driving OCIO platform adoption, leveraging these services to nearly double their allocations to private markets. Resource constraints and smaller internal investment teams make outsourced expertise increasingly attractive for smaller nonprofits facing pressure from declining federal funding and rising operational demands.
However, a significant access disparity remains embedded in the institutional investment landscape. Endowments with less than $1 billion in assets maintain venture capital allocations near 3%, compared to substantially higher allocations at larger institutions, despite NACUBO endowment studies documenting consistent long-run return premiums for venture capital. This gap underscores persistent structural advantages enjoyed by larger institutional investors in accessing and deploying venture capital, even as demand for VC exposure reaches historical highs across the sector.
This shift reflects a broader structural trend within the endowment and foundation universe. Private markets allocations—encompassing both private equity and venture capital—have expanded across every asset size segment tracked by OCIO analytics platforms. Average allocations to private equity and venture combined have grown from 5.8% of portfolios in the first quarter of 2021 to substantially elevated levels by 2026, representing a material reallocation of capital from traditional public market strategies.
The adoption of outsourced CIO services has become particularly pronounced among smaller institutions. Endowments and foundations with assets between $101 million and $250 million are driving OCIO platform adoption, leveraging these services to nearly double their allocations to private markets. Resource constraints and smaller internal investment teams make outsourced expertise increasingly attractive for smaller nonprofits facing pressure from declining federal funding and rising operational demands.
However, a significant access disparity remains embedded in the institutional investment landscape. Endowments with less than $1 billion in assets maintain venture capital allocations near 3%, compared to substantially higher allocations at larger institutions, despite NACUBO endowment studies documenting consistent long-run return premiums for venture capital. This gap underscores persistent structural advantages enjoyed by larger institutional investors in accessing and deploying venture capital, even as demand for VC exposure reaches historical highs across the sector.
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