It Takes a Village: Wharton and Impact Investing
- by Jem Hudson
As Social Capital Markets 2015 (SOCAP) wraps up, everyone who attended seems to be full of impressions, both about the event and about impact investing as a field. If you were at SOCAP this week, you probably noticed Wharton’s expanding presence at this annual convening of the “who’s who” of impact investing. Indeed, within the impact investing ecosystem, the school has a growing relevance.
At the conference, the school announced a new research study focusing on performance measurement and led by the Wharton Social Impact Initiative (WSII) and Wharton finance faculty. In this rigorous work, Wharton’s thought leaders explore the widespread assumption that impact investing private equity funds cannot achieve market rate financial performance. And this is just one of many examples of Wharton’s recent impact investing initiatives.
From their earliest days, Wharton’s impact investing efforts promised to align the school’s long-standing leadership in finance with an emerging interest in social impact and doing good. Simply put, it makes complete sense that Wharton would become a premier training platform for impact investing. But how did this come about?
The short answer is: It took years of collaborative efforts by students, administration, faculty and alumni. In particular, three key factors contributed to Wharton’s success:
1. Engage students through hands-on, experiential learning.
Even before the term “impact investing” was coined, talented students at Wharton were trying to figure out how to use their financial acumen to change the world. In 2007, a handful of students formed a small group within the broader Wharton Social Impact Club, aiming to make investments into companies delivering positive financial returns alongside meaningful social and/or environmental impact. Because there was no other label available, this strategy was defined as a triple bottom line investment philosophy. Each academic year, students worked closely with Wharton’s administration and faculty to further this group’s mission, collectively building what is now referred to as the Wharton Social Venture Fellows (WSVF). It is fair to say that WSVF has become a campus institution. Historically comprised of MBA students only, it recently started admitting undergraduates in response to intense interest.
2. Engage the broader MBA community through student competition.
In tandem with its internal efforts to develop and expand the Wharton Social Venture Fellows, the Wharton Social Impact Initiative joined with Bridges Ventures to establish the MBA Impact Investing Network & Training (MIINT), a student competition in which teams pitch their impact investment ideas to a panel of judges. Launched in 2012, MIINT has quickly become the premier international impact investing competition for MBA students, with highly motivated teams from Wharton, Harvard, Stanford and other top MBA programs putting on their A game in hopes of winning the top spot and the reputation as true impact investing masters among their peers. As student interest in impact investing continues to grow and deepen, the competition is only getting fiercer.
3. Establish thought leadership within the impact investing ecosystem.
The impact investing ecosystem continues to be extremely fragmented, and there are several highly respected thought leaders advancing the field. But despite this crowded space, Wharton has developed a leadership position as a platform for rigorous, data-driven research that leverages the school’s existing leadership in finance and its faculty’s knack for data and analytics. To be clear, there are many ways to think about impact investing and a range of opportunities for entrepreneurs, field-builders and thought leaders to make their mark. However, the rigorous perspective from Wharton’s finance experts like professors David Musto (the Ronald O. Perelman Professor in Finance) and Chris Gezcy, combined with practical knowledge from Jacob Gray (WSII’s senior director), is instrumental in generating greater momentum among the most demanding institutional investors. Quite simply, sophisticated institutional investors need the same type of data and analytics for impact investing that they utilize in all of their investment decisions, and Wharton’s research promises to help take the impact investing thinking in this direction.
Impact investing is an idea whose time has come, and it is wonderful to see organizations like Wharton engage in the ecosystem, not only by expanding on their existing strengths and capabilities but also by innovating and venturing into the uncharted territory. This type of innovation is critical for the future of impact investing.
As a proud alum and former president of the Wharton Social Venture Fellows, I am delighted to see this progress and momentum. But what I am especially proud of is the level of collaboration that Wharton has demonstrated on its path to impact investing leadership. After all, one of the key skills students are taught during their time at Wharton is teamwork.