Student Venture Funds Tackle Social Problems

Posted by: Alison Damast on September 27, 2010

For years, the goal of most student-managed investment funds on business school campuses has been to make a profit, rather than change the world. Now, two business schools that operate student-run venture funds, the University of Michigan’s Ross School of Business (Ross Full-Time MBA Profile) and the University of Utah’s David Eccles School of Business (Full-Time MBA Profile), are trying to do both at the same time.

The Ross School announced last week that it had launched a new Social Venture Fund, where students will invest in for-profit companies that have a “significant social impact” as part of their mission, according to a school press release. The students involved with the project will make investments of up to $200,000 in early-stage companies that can deliver returns in five areas: education, environment, finance, food and nutrition, and health and urban revitalization, according to the release. The student-run fund will focus on companies based in the Detroit and Southeast Michigan area and will make its first investment this spring, the school said.

The University of Utah also announced last week that it had created the University Impact Fund, a venture fund that also will have a social impact and sustainability mission. Students at the school plan to raise $10 million to $15 million from investors and then invest those funds in startups that work in areas such as clean water, waste management and alternative energy. Any profits students make will be returned to investors, the school said.

Both schools have a strong track record when it comes to running venture funds, so it will be interesting to follow them as they dip their toes into the social-impact investing realm. The University of Utah has been running a self-sustaining student-run venture capital firm, the University Venture Fund, since 2005, and manages $18 million in assets, according to the school. The University of Michigan also operates the student-run $5.5 million Wolverine Venture Fund and the Frankel Commercialization Funds.

Readers, what do you think of the concept behind these new venture funds? Do you think these types of social impact funds might be the start of a larger trend in the business school-investing world?

Reader Comments

jay parkhe

October 6, 2010 9:27 PM

I like the thought. I had an opportunity to be the jury for SIFE India student projects in Chennai this year and I was very impressed with the work these graduate school students are doing especially to make people employable in the Tsunami affected areas.
Why only B schools? is the only question I have. If the venture funds join hands with SIFE or equivalent organisations I am sure the community would benefit.
www.jayparkhe.com

Evelyn Rodriguez

October 8, 2010 11:30 AM

I'm over 40 and would love to go back to school

DELCIE BOLTON

February 23, 2011 12:49 PM

To-the-point post. Here are couple thoughts. What excites me is that favourable changes seem to be emerging for the US private equity industry comparing to last 2 years, supported by increased valuations and conditions in the capital markets. The private equity industry has not been immune to the affects of the struggling economy, as last couple years results demonstrated, but performance in the beginning of 2011 has been promissing. Opportunities abound in the current environment offering ample private equity investors capital to deploy, and evidence that some of the best performing private equity vintage returns, historically, were made at the bottom of the cycle.

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