Overview of 20VC with Scott Wilson
Harry Stebbings sits down with Scott Wilson, CIO of WashU’s endowment, for a candid deep dive into how he helped grow the institution from just under $8B to nearly $20B in managed assets. The conversation focuses on endowment portfolio construction, why WashU leans heavily into direct and co-investment opportunities, how Scott thinks about concentration, valuation discipline, liquidity, and why he remains skeptical of mega-fund venture strategies. He also shares his views on AI market froth, Europe and China as investing opportunities, and the biggest mistakes and lessons from his career.
Key Themes and Takeaways
WashU’s investment philosophy
- The endowment runs a highly concentrated strategy centered on:
- strong external managers
- direct investments
- co-investments
- letting winners compound for long periods
- Scott repeatedly emphasizes that the goal is not complexity, but conviction and concentration.
- Their internal framing is based on look-through exposures, not just fund labels or headline fund performance.
Why direct investing matters
- WashU has built an internal skill set that allows the team to source, underwrite, and monitor direct deals.
- Scott says direct investing is a “muscle” that LPs need to build internally.
- His team spends 80–90% of its time meeting individual companies, rather than just meeting managers.
- He believes this offensive, company-first model has outperformed the more traditional fund-only approach.
Concentration is a feature, not a bug
- WashU is comfortable with high conviction positions if governance supports it.
- At one point, SpaceX represented more than 20% of the portfolio.
- The team uses board oversight for very large single-name exposures, but otherwise has meaningful freedom to concentrate.
- Scott argues that artificial concentration limits in funds often prevent LPs from fully participating in the best outcomes.
Portfolio Construction and Asset Allocation
Publics vs. privates
- WashU is broadly aiming for a portfolio that is roughly 50/50 public and private, though liquidity constraints shape that mix.
- Scott says the main difference between publics and privates is not the asset class itself, but marking frequency and liquidity.
- If WashU did not have required payouts, he says the portfolio would likely tilt much more heavily toward privates, potentially 70–80% private.
Why privates are attractive
- Scott believes private markets are less efficient and provide access to assets that are less “picked over.”
- In his view, it is often easier to generate alpha in privates than in public markets.
- WashU has seen stronger compounding in privates than in public equities over the past decade.
Look-through diversification
- Scott thinks diversification benefits drop off quickly after roughly 20–30 underlying positions.
- WashU targets having about half of its portfolio in its top 50 look-through positions.
- He sees this as still diversified, but concentrated enough for meaningful upside.
Lessons from Grinnell and WashU
What carried over from Grinnell
- Scott says the strategy at WashU is fundamentally the same as what he learned at Grinnell:
- concentrated managers
- concentrated direct positions
- conviction-based portfolio construction
- He credits David Clay and the Grinnell model for shaping his thinking.
The WashU turnaround
- When Scott arrived, performance had lagged for a long time.
- He and the team put in redemption notices for more than half the portfolio in the first week and ultimately turned over more than 75% of the portfolio through public and private restructuring.
- The process took time and required patience, despite the urgency from the board to improve results.
Venture Capital and Manager Selection
Why WashU is skeptical of mega funds
- Scott does not think WashU’s model fits well with mega-funds.
- His core argument:
- they often don’t need WashU’s capital
- their check sizes and valuations make it harder to generate historic venture-style multiples
- scaling fund size usually hurts fund-level returns unless outcomes scale even more dramatically
- He prefers smaller, high-conviction funds where a relatively modest check can still be meaningful.
How WashU chooses managers
- The team doesn’t focus much on fund-level performance in isolation.
- They look at:
- underlying exposures
- the quality of the manager’s portfolio
- whether there is a meaningful valuation discipline
- whether the partner’s thesis can be independently underwritten
- Scott says they only invest in a tiny fraction of what they review.
Why they churn managers
- The most common reason they walk away is discipline around valuation.
- If a manager is consistently willing to pay almost any price, WashU will generally step aside.
- Scott is explicit that the best companies can look expensive at entry and cheap in hindsight, but he still wants a valuation framework he can defend.
SpaceX, Winners, and the Cost of Not Adding
The biggest lesson
- Scott says the biggest mistake he’s made at WashU was not adding to winners once they were already large positions.
- He believes this cost the endowment billions in potential upside.
- The logic was often frame-of-reference bias:
- “the position is already big”
- “the price has moved”
- “we shouldn’t add more”
- In hindsight, those were often the very names that deserved more capital.
SpaceX as a case study
- WashU held SpaceX through continuation vehicles and up through the IPO process.
- Scott notes that the team had conviction and multiple chances to take liquidity, but chose to hold because they believed in the long-term compounding.
AI, Valuations, and the Market Cycle
Scott’s view on AI froth
- He sees clear signs of a bubble-like dynamic in parts of private AI markets.
- His concern is not that AI is unimportant, but that valuations are outrunning durable business models.
- He questions how many AI companies will still exist in 10 years and whether the profit pools are truly defensible.
The model-layer skepticism
- Scott is skeptical of the economics at the frontier model layer if switching costs remain low and free alternatives are plentiful.
- In his view, if multiple models are interchangeable for most use cases, it becomes hard to sustain wide moats or lasting pricing power.
- He believes many customers start with frontier models, but then downgrade once they realize they don’t need the most expensive option.
The shakeout is coming
- He expects a shakeout in AI eventually, though the timing is uncertain.
- Historically, many hot technology sectors have reverted to being much less attractive businesses after periods of extreme enthusiasm.
Europe and China: Where Others See Risk, Scott Sees Value
Europe
- Scott says WashU has found attractive opportunities in Europe, including fintech and other idiosyncratic deals.
- His key point: if the same company quality exists in Europe but trades at a much lower multiple, that can be compelling value.
- He stresses the difference between price and value:
- price = what you pay
- value = what you get
China
- WashU has more China exposure than many peers, though not a huge amount.
- They have a Shanghai office and local coverage.
- Scott is willing to invest in China when:
- the company is strong
- the capital can be returned to shareholders
- the geopolitical risk is understood and priced in
- He argues that Western investors sometimes overreact to China risk while ignoring that developed markets can also be highly interventionist.
Biggest Mistakes and Regrets
What he wishes he had done
- Add more capital to their best winners earlier.
- Be more aggressive in scaling exposure to the highest-conviction names.
What he wishes he had not done
- Back some funds and companies that ultimately underperformed.
- Hold too long during the 2020–2021 frothy venture period, when WashU had the chance to sell secondary positions at attractive prices.
A major timing mistake
- Scott says one of the largest regrets was waiting too long to sell secondaries in late 2020 / early 2021.
- The team anticipated a bubble, but waited for a slightly better window and missed peak pricing.
Leadership, Culture, and Personal Motivation
Why he stays at WashU
- Scott says he is very happy at WashU and is well-compensated, but the bigger reason is the people.
- He values:
- the board
- the administration
- the team
- the mission of supporting the university
What he’d change if he could
- He would likely smooth the university payout over a longer period.
- He believes the current payout structure creates tension in certain market environments, though he understands the mission-driven constraints.
Best Advice Shared
Scott’s favorite advice
- “Be the best at things that require no talent.”
- He expands this to include:
- showing up
- curiosity
- hard work
- being presentable
- asking good questions
- being respectful and kind
Final Quick Takeaways
- WashU’s success comes from conviction, concentration, and a willingness to be different.
- Scott strongly favors direct and co-investment exposure over passive fund accumulation.
- He is skeptical of mega-funds and overly inflated private-market valuations.
- He sees opportunity in Europe and China where others see only risk.
- His biggest regret is not adding more to winners sooner.
- His core investing principle is simple: price is what you pay, value is what you get.