MANAGEMT 898.201 - Impact Investing

Course Description
Impact investors seek to generate environmental and social impacts in addition to financial returns.  This emerging investment strategy is developing around the globe as a way to expand the ability of for-profit ventures to scale their impacts on critical issues such as energy, water, climate change, community development, health, sustainable development and education. It includes venture capital, private equity, debt and specific kinds of philanthropic investment tools. Social ventures have traditionally had few sources of expansion capital to approach, but in the past few years, their options have been growing as the universe of impact investors and lenders has grown. In addition, new corporate structures, industry metrics, and financing platforms are being developed to bring transparency to the market and facilitate the flow of capital to social enterprises in a range of industries. From a new global ratings agency emerging to assess the impact of funds doing this work, to President Obama’s recent commitment to social impact bonds, to the development of new corporate forms including Benefit corps and low-profit limited liability companies (L3Cs), the field of impact investing is growing rapidly. And the membership list of the new Global Impact Investing Network shows the diversity of the field: from JP Morgan to Triodos to the Overseas Private Investment Corporation to the Gates Foundation, major institutions of all types have become interested in putting their capital to work to create both financial and social value.

In Impact Investing, students will examine the developing marketplace of impact investing from two points of view. First, through a series of case studies of domestic and international social ventures that need risk capital to grow, students will explore how entrepreneurs are faring in their search for growth capital and the challenges they face in benefitting from it.  Second, students will consider how investors and lenders adapt traditional forms of financing to support enterprises seeking both profit and mission. Case studies and guests will explore challenges and lessons in creating successful fund and deal structures that align various blended value objectives for both entrepreneurs and investors.

Students will complete two major deliverables as part of the course. The first will be an individual paper that designs a better business model and financing strategy for a global nonprofit venture seeking impact investing debt to scale. The second will be a group Impact Investing Exercise that includes designing an impact investing fund, conducting due diligence on a “live” social venture currently seeking funding, and making live presentations to a judging panel about recommended terms and structure for investment. 

The course will be co-taught by Cathy Clark and Rick Larson. Cathy is an Adjunct Associate Professor at the Center for the Advancement of Social Entrepreneurship (CASE) at Duke’s Fuqua School of Business.  She has been an impact investor for 20 years, taught at Columbia Business School for 10 years, and directs CASE i3: The Initiative for Impact Investing at Fuqua.  Rick is Director of Sustainable Ventures for The Conservation Fund and former Managing Director for SJF Ventures, LP, a $45 million mission-driven venture capital fund with offices in Durham, NC and New York, NY. He is an Adjunct Associate Professor at Columbia Business School and a Lecturer at UNC- Kenan Flagler Business School. Guest lecturers will include David Robinson and John M. Buley, Jr. of Fuqua.