Yale's deadline for applications to its new prospect fellowship program has just passed.

Yale will offer working capital, investment capital, and training to a cohort of five emerging managers.

I've been thinking about why Yale launched the fellowship and what might happen

as it rolls out. Yale, emerging managers, and other allocators have opportunities and risks

arising from the program, including some potential unintended consequences.

This what Ted's thinking is called Yale backs emerging managers, and then what?

For those short on time, here's a summary. Yale's motivation. Yale's Endowment is driven by generating

outstanding investment results. Publicizing the fellowship also serves as a branding exercise to position Yale as a go-to

source of capital for the next generation of investment founders.

Yale's risk.

Despite Yale's amazing success backing early stage funds under David Swenson, this program is a

different animal. Yale will be deluged

by inbound interest, most of which will be of lesser quality than Yale has reviewed historically.

Yale may struggle to process the volume gracefully and repeat its past results.

Manager's motivation.

Early stage managers will see a rare opportunity to receive capital and mentoring from a

world-renowned investment organization. Should the manager earn Yale's confidence for a larger

allocation, it will be well on its way to building a successful business.

Manager's Risk The history of other emerging manager programs implies that most of the fellowship recipients

will not graduate to Yale's main portfolio.

An applicant may want to consider the negative signaling effect of that outcome on their business and career.

Other allocators. Yale provides cover for more institutions to create similar programs,

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