Monday5 August 2019 ★ FINANCIAL TIMES 13WORK & CAREERS
MBA graduates
from the Tuck
School of
Business
who have
participated in
social impact
fundsF
rom his base in Silicon Valley,
Jordan Lee took a surprising
decision in early 2019. He
opened the books of his
start-up company to detailed
scrutiny from an unusual group of
potential investors: MBA students from
Dartmouth College with only $25,
to offer.
“One of our venture capital backers
put us in touch,” says Mr Lee, who has
already raised $2m in seed funding for
his companyCollegeBackerwhich pro-
vides a way for families and friends to
navigate complextax structures to con-
tribute to a loved one’stuition fees. “The
process the students ran was really
impressive. They were mission-orien-
tated, clear and rigorous. We were super
excited and honoured that they would
invest.”
For Alyssa Kasanoff, who has just
graduated from the Tuck School of Busi-
ness at Dartmouth, participating in the
decision by the Tuck Social Venture
Fund to invest in CollegeBackerwas one
of the highlights of her MBA.
“We look for companies that are
excited to partner with us, and we were
interested in CollegeBacker because of
the implications for higher education,”
she says. “We are just a pesky little
investor bugging companies for infor-
mation, but most have been receptive
to the idea of our different lens as oper-
ators, investors and future business
leaders.”
Stanford, the University of Minne-
sota, London Business School and IESE
in Spain are just some of an increasing
number of business schools that offer
students the chance to gain practical
investment management experience.
Many of these have a focus on social as
well as financial objectives.
“It’s really exciting,” says Nicole
Torrico, programme manager at the
Intentional Endowments Network, aUS-based group of university invest-
ment officials interested in directing
funds towards sustainability. She esti-
mates that there are some 200 student-
managed funds in universities, more
than 30 of which have a focus on
“impact” — notably environment, social
or governance (ESG) issues.
Late last year, faced with strong
demand, her organisation established
the Sustainable & Impact Investing
Learning & Knowledge Networkto
showcase examples and share experi-
ences among student-managed funds. It
holds regular calls with student funds
on issues including launching and struc-
turing funds, how to conduct due dili-
gence and considerations around
investment returns.
Ms Torrico identifies 2014 as a turn-
ing point. Student pressure led to some
university endowment funds divestingfrom fossil fuels and to others earmark-
ing a portion of their portfolios for
investment in companies meeting spe-
cific ESG criteria. Sometimes this was
done in consultation with students or
led to funds being managed directly by
students.
John McKinley, executive director of
Tuck’s Center for Business, Government
& Society, says: “We see a groundswell of
interest across the student body around
ESG which reflects the larger macro
trends. More and more schools are look-
ing for opportunities.”
A former impact investor, he helps
oversee the Tuck Social Venture Fund,
which was backed by $100,000 donated
by alumni and focuses on clean energy,
healthcare, food, technology and educa-
tion. CollegeBacker is its third invest-
ment, following one in Education Modi-
fied, to support children’s learning, andanother in Brightfield Transportation
Solutions, a network of charging sta-
tions for electric cars.
“Funds are a laboratory for student
learning: what is impact investing, what
are the different tools and the biggest
challenges for implementation,” he
says.
He points to a recent studyby
JPMorgan Private Bankhighlighting
the shift of wealth into the hands of
millennials over the coming decade,
and howsustainability is an investment
priority for them. “The next generation
is disproportionately looking to align
with positive social environmental out-
comes. That’s a significant shift from
10-15 years ago.”
Helena Hong, a recent graduate of the
UCLA Anderson School of Manage-
ment, is typical of the trend Mr
McKinley describes. She participated inone of five teams helping run theAnder-
son Venture Impact Partnersfund,
established in 2017 with $500,
donated by an alumnus.
She previously worked in what she
describes as “conventional for-profit
investing” for a foundation’s endow-
ment but decided to take an MBA and
refocus on impact investing, with a par-
ticular interest in climate change.
“There are incredible ways to leverage
finance and support issues that need the
capital,” she says. “It seems fitting to use
my background for something more
socially oriented.”
Ms Kasanoff says one of the greatest
debatesstudents at Tuck had was
around the definition of impact they
were seeking. “That’s one of the most
challenging conversations. It can mean
different things across different asset
classes.”
Matthew Baer, freshly graduated
from Tuck and whoworked with other
students from other universities’ stu-
dent impact funds, says one concern he
often observed was how to handlethe
fiduciary responsibilities of the fund.
“We were lucky, we had administrative
support and the ability to navigate the
structures for investment,” he says.
It is too soon to tell whether MBA stu-
dents will prove to be astute investors —
these funds are new and some not even
fully invested.But many like Ms Hong,
who now carries out impact investing
for a family foundation, say they have
benefited from the experience. “It is just
as important for student investors to
learn when to say ‘no’ to an investment
opportunity even when it’s compelling.
A lot of times, even in a professional set-
ting, you do all the diligence but you
have to take a hard look and if you have
some concerns or hesitations, you can
always wait,” she says.
There also appears to be plenty of
interest from companies, which gain not
only funding but also insights from MBA
students on specific projects and the
chance to meetpotential future recruits.
At CollegeBacker, Mr Lee says: “Hav-
ing the university affiliation is always
good given our product. It provides us
with an opportunity to recruit on cam-
pus and we may use universities as a
distribution channel.”The MBA students focusing on impact funds
Business schools are
supporting investmentfunds that concentrate on
social objectives, writesAndrew Jack
One of
the greatest
debates
students
at Tuck
had was
around the
definition
of impact
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