Impact investing plays an expanding role in deploying financial resources to address social problems through market-based interventions. Impact investing includes both “non-concessionary” or “market-rate” investments that target risk-adjusted market-rate returns and “concessionary” or “catalytic” investments that anticipate lower than market returns.
Impact investing presents several intellectually interesting and practically important issues. The institutions of impact investing provide an opportunity to apply frameworks from corporate finance, microeconomics, and strategy to an interesting and rapidly evolving sector. There are rich questions about the market for impact investors -- who they are, how to market to them, and how to structure funds to attract them. We will study the “impact” of impact investing, how to measure it, and how to incorporate it in decision-making and incentives. One objective of the course is to engage students in thinking through these issues with the tools and frameworks they have learned at Booth.
Students will work in teams of four to six on several projects, including designing and pitching an impact investment fund. This will include identifying opportunity drivers and a thesis, an investment strategy, an impact management and measurement framework, and a pipeline of companies. One objective is to source a potential investment by Booth’s student-managed Steven Tarrson Impact Investment Fund. Each group’s final presentation will be in the form of a presentation to a group of potential investors.
This class complements the existing curriculum in corporate finance and private equity (Corporate Finance, Entrepreneurial Finance and Private Equity, Commercializing Innovation). Consistent with our curricular philosophy in other social enterprise courses, this is not a substitute “social” version of an existing course, but will focus on differences between the social and traditional institutions. Although no individual student needs to have a deep finance background, we will ensure that each team has at least one member with rich knowledge/experience. All students should have some working knowledge of finance and financial institutions.
