Impact investing plays an expanding role in deploying financial resources to address social problems through market-based interventions. Impact investing includes both “non-concessionary” or “market-rate” investments that target risk-adjusted market-rate returns and “impact-first” or “catalytic” investments that anticipate lower than market returns.
Impact investing presents several intellectually interesting and practically important issues. Learning the strategies and mechanics of impact investing provide an opportunity to apply frameworks from corporate finance, microeconomics, and strategy to an interesting and rapidly evolving sector. There are rich questions about the market for impact investors -- who they are, how to market to them, and how to structure funds to attract them. We will study the “impact” of impact investing, as well as the financial returns and risks of such investments.
Students will work in teams of four to six to develop and pitch an impact investment fund. Group assignments will help each team identify opportunity drivers and a thesis, an investment strategy, an impact management and measurement framework, a pipeline of companies, and prospective investors. Each group’s final presentation will be in the form of a presentation to a group of potential investors.
The course also brings practitioners to the classroom, offering candid presentations from leading fund managers pursuing impact strategies within venture capital, real estate, private credit, and private equity. Individual assignments ask students to connect what they heard with the practice of finding deals and constructing appropriate impact metrics. Participation is a significant component of the course, with the expectation that students come prepared to ask questions and contribute insights.
This class complements the existing curriculum in corporate finance and private equity (Corporate Finance, Entrepreneurial Finance and Private Equity, Commercializing Innovation). Consistent with our curricular philosophy in other social enterprise courses, this is not a substitute “social” version of an existing course, but will focus on differences between the social and traditional institutions. Although no individual student needs to have a deep finance background, we will ensure that each team has at least one member with rich knowledge/experience. All students should have some working knowledge of finance and financial institutions.
