"Success begets success in venture capital," says Meyer.

HMC invests in a broad group of third-party venture capital firms. These firms are located across the country, from Highland Capital Partners headquartered in Boston, to Crosspoint Venture Partners, of northern California, to Walden International Investment Group of San Francisco. These companies invest in firms focusing on a broad range of start-up companies, from the internet to communications to health care.

Familiar territory

Venture capital is certainly not a novel concept for HMC. According to Meyer, Harvard first put money into venture capital in 1978, the year Intel introduced the 8086 microprocessor. HMC has set the 15 percent goal for private equity in1992.

HMC investors could increase this goal to 20 percent without consulting HMC's management board, a group of top University administrators and outside investment specialists. But raising the number beyond 20 percent would require a conversation with the board.

While Harvard used to invest directly in businesses without the help of the third-party companies, changes in the tax laws after the Republicans took control of the Congress made this difficult to continue.

"Ten years ago, [venture capital investment] was nothing like today," says Meyer.

He notes that in the 1980s and early 1990s, it usually took seven to 10 years before the profits were returned to the endowment. Now, HMC can get large profits back from its investments in two to three years.