The completion of two first-of-their-kind investments by the Social Venture Fund in 2012 represents a major milestone for the Ross School of Business and the Zell Lurie Institute. Multidisciplinary teams of Michigan students spent more than a year sourcing deals, performing due diligence, partnering with local and national investors, and closing on early-stage investments in two for-profit social organizations: online educator LearnZillion and healthy food supplier Jack & Jake’s. Each business received $50,000 from the fund.
“We are breaking new ground because this is the first student-run socially oriented investment fund in the country, and one of the pioneers in the entire industry,” says Finance Professor Gautam Kaul, managing director of the fund. “Through these two investments, we are demonstrating we can invest in businesses that make money, but are focused first and foremost on societal impacts. The most important takeaway for our students is that business education is supposed to serve problem-solving of the richest kind.”
The Social Venture Fund, launched in 2009, provides students with hands-on learning experience in the areas of social- and environmental-driven venture investing and entrepreneurship. It also supports enterprises that address pressing social needs, which otherwise might not be met, or met as effectively, through more traditional investment channels.
“My real passion is being around innovative social entrepreneurs, either on the investment side or the entrepreneurial side,” says Seth Greenberg, MBA ’12, one of the fund’s student directors. “The Social Venture Fund works at the juncture of business and social enterprise, and offers an incredible learning opportunity to apply private-sector solutions to social problems. Working on the fund has been an invaluable experience for me personally and professionally.”
In April, Greenberg and the due-diligence team led by Emily Airey, MBA ’12, and Daniel Reyes, MBA ’12, joined a syndicate of 17 investors in a Series A round investment, totaling $2.4 million, in LearnZillion, a Washington, D.C.-based for-profit educational organization. LearnZillion has developed an innovative Web-based learning platform to share video-taped best practices from the classroom that students can use to improve their academic abilities in math, science and other core subjects.
“Through the fund, we learned all aspects of the impact-investing and deal-making process, including how to evaluate the investment quality and quantify the social impact of for-profit organizations with social missions,” Greenberg says. A year earlier, in summer 2011, he completed a Marcel Gani internship with Local Orbit, an online farm-to-market start-up, which afforded insight into the challenges and rewards of a social entrepreneur. “Now, I’ve seen both sides of the spectrum,” continues Greenberg, who accepted a position with Ernst & Young’s Consulting Group after graduating from the Ross School in April. “Long term, I’d like to work with a social venture fund or launch my own for-profit social venture to help alleviate a societal problem.”
Dual-degree student Emily Rinner, MBA/MPP ’12, received her introduction to social venture investing and entrepreneurship while conducting due diligence on the sustainable food start-up Jack & Jake’s, the recipient of the Social Venture Fund’s second investment. “I joined the fund because I wanted to understand the role business could play in addressing society’s challenges,” says Rinner, whose primary interest centers on poverty-related public-policy issues. “I learned what a venture-investing firm does, how it evaluates a business, and why it decides to invest. I also gained experience in communicating and building a relationship with a social entrepreneur. This gave me confidence to be an active player in the overall investment process.”
In July, the Social Venture Fund participated in a $225,000 investment round in Jack & Jake’s. The New Orleans-based wholesale food distributor is building a new local food system in southern Louisiana to reconnect local farmers and fishermen with those who need access to fresh, healthy foods.
This fall, Rinner will put her social venture investment skills into practice at Accenture in Washington, D.C., where she will be a management consultant for the federal government and other public-sector and nonprofit organizations. “Through my work on the Jack & Jake’s investment, I developed the ability to quantify the social impact of an organization,” she says. “In my new job, I will be able to help clients apply business practices and measure social impact in hard numbers, so they can become more effective and accomplish their goals.”