Impact investing: in pursuit of financial returns and meaningful social change.
In the last several years, impact investing has emerged as a promising tool for tackling some of the world’s most complex and enduring social problems. In impact investing, investors actively seek a positive, measurable social or environmental impact alongside a financial return. These types of investments span across asset classes and occur in both emerging and developed markets. Impact investments are financing diverse efforts throughout the social sector, including education, agriculture, financial services, the environment, and healthcare.
Impact investing – both a puzzle and a promise – sits squarely at the intersection of Wharton’s renowned financial expertise and its commitment to social impact.
Wharton’s strong history with financial research and the financial services industry provides a unique opportunity to examine impact investing with the same rigor it has used with other investment tools and strategies.
This multifaceted program advances the science of impact investing by training students—the next generation of investors—to combine financial expertise with an understanding of social problems, change strategies, and impact evaluation.
Wharton Social Venture Fund
The Wharton Social Venture Fund (WSVF), a student-led group housed under the Wharton Social Impact Initiative, seeks to co-invest and partner with angel and venture capital investors focusing on a double or triple bottom line investment philosophy.
The WSVF looks to:
- Support and promote early stage companies that create positive social or environmental impact
- Prepare students to become leaders in the impact investment community, where sound investment principles are applied to complex social and environmental problems
Each year, the WSVF selects first-year Wharton students based on commitment, experience, and industry knowledge, and provides high quality training on the investment process, impact investing, and portfolio management. Second-year MBA students become project leaders, charged with managing project workflow and knowledge transfer between WSVF entrepreneurs and social VC partners.
Founded in 2007, the WSVF portfolio has included strategy and co-investment projects, with an approach focused on companies in education, energy, health and wellness, food and nutrition, environmental sustainability, and financial inclusion.
The WSVF also annually competes in the MBA Impact Investing Network & Training Program (MIINT) and has won the competition two of the last three years.
Impact Investing Research
Despite increased awareness around impact investing, the industry remains a nascent field, often limited to specialized, niche players. While impact investing is gaining traction in practice, the industry faces a major hurdle in attracting significant investment from large institutional investors.
In traditional investment practices, academics have conducted rigorous, reliable research on financial performance, and the resulting evidence base is used extensively by large institutional investors in the development of their portfolio strategies. The impact investing industry does not currently enjoy this resource, and there is precious little academic research published on impact investing in top journals. The major barrier to research is a lack of a robust, accessible database of fund and transaction-level performance.
In collaboration with Wharton’s Department of Finance, WSII launched a research project designed to collect and analyze financial performance data on private equity impact investment funds. WSII is committed to creating a robust database for transformational academic scholarship now and for years to come. Such research can fill critical gaps in knowledge for investors to better assess risk and inform investment strategies in impact investing.
MBA Impact Investing Network & Training
Building on Wharton’s experience with the Wharton Social Venture Fund, the Wharton Social Impact Initiative co-produces the MBA Impact Investing Network & Training Program (MIINT) with its founding organization, Bridges Ventures. With the support of Wharton faculty and prominent practitioners from around the globe, MIINT provides students with both theoretical and hands-on experience with the impact investment process.
In this annual program and competition, MIINT engages approximately 200 students from 11 business schools, including Wharton, Harvard, Stanford, Columbia, Ross, Kellogg, Haas, Booth, Darden, Goizueta and University of Utah, to source and conduct diligence on early stage impact investments and present them to an Investment Committee of leading venture capital professionals.
The final stage of the competition brings students to Wharton to present their analysis to the Investment Committee for a potential investment of $50,000-$100,000.
Wharton Business Plan Competition: Social Impact Prize
The Wharton Business Plan Competition (WBPC) is an annual platform for student entrepreneurs to develop and launch their businesses and compete for more than $115,000 in cash and prizes.
The competition includes a $10,000 social impact prize, accessible to any business plan incorporating social impact. The 2014 social impact prize winner was Dana Cita, a business focused on bridging the education financing and employment gaps for youth in Indonesia.
Started in 1998 by the Wharton Entrepreneurship Club, WBPC is a global leader in university-run business plan competitions. The competition is open to all students at the University of Pennsylvania, and since its inception, has launched a number of successful companies – including the boutique eyewear company Warby Parker and Saleroads, the nation’s leading B2B appointment and lead generation provider.
“Capital for Social Impact” Series
The Capital for Social Impact series provides Wharton and Penn alumni with a trusted platform through which they can explore the topic of impact investing. WSII is hosting events around the world, focused on how innovative finance tools can be used to make a positive social or environmental impact.
WSII takes an interdisciplinary approach to examining topics such as risk and externalities, impact investing in philanthropy (e.g., mission- and program-related investments), industry- and sector-specific topics, and mainstream investing.
The series explores both the current state of impact investing activities (Impact Investing 1.0) and the next stages for investing in social impact. WSII also looks at how individuals and organizations can implement and assess impact investing strategies in their own work and how the field can play a valuable role in building resilient communities, including a strong civil society and sustainable global economy.
This year, WSII is producing the Capital for Social Impact series with support from the Rockefeller Foundation.
Impact Investing Advisory Council
WSII relies on an Impact Investing Advisory Council comprised of dedicated professionals and thought leaders in the Impact Investing space. This council provides expert insight on impact investing focus areas and helps to shape the goals and direction of this effort.
Council members include:
- Neil Blumenthal, Warby Parker
- Suzanne Biegel, Catalyst at Large; Senior Advisor, ClearlySo; Vice Chair, Confluence Philanthropy
- Chris Geczy, The Wharton School
- Jacob Gray, Wharton Social Impact Initiative
- Bart Houlihan, B Laboratories
- Katherine Klein, The Wharton School
- Ron Moelis, LM Partners
- Wayne Silby, Calvert Foundation
- Brian Trelstad, Bridges Ventures.