MBA 820, Financing Social Ventures: Impact Investing (seminar)
Richard Larson, Cathy Clark
1.5 credits
Growing “single bottom line” for-profit companies have access to well-developed equity and debt markets at every stage of their development. On the other hand, social ventures – those that generate earned revenue while pursuing social or environmental benefits -- face limited options for expansion capital. For-profit social ventures find that traditional investors are wary of company objectives that might reduce the potential profitability of a firm. Non-profit social ventures are by definition unable to access traditional equity markets, so typically they must fund growth with a blend of debt and philanthropic revenue, or develop “hybrid” models to access equity investors. Fortunately, the universe of social enterprise investors and lenders is growing. 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.
Financing Social Venture: Risk Capital for Expansion explores how social entrepreneurs are faring in their search for growth capital, and how investors and lenders adapt traditional forms of financing to support enterprises seeking both profit and mission. The course will examine the debt and equity structures available to social ventures (both non-profit and for-profit) and their implications for financial growth and mission impact. We will also discuss how financing options are affected by legal structure innovations (e.g., B-Corp, L3C) and metrics for “mission impact” investors (e.g., GIIRS).
Students will explore these concepts in a series of cases on domestic and international social ventures that need risk capital to grow. By the end of the class every student will understand the existing capital opportunities for non-profit and for-profit social ventures and have an appreciation for the “state of the art” through class assignments, readings, and contact with practitioners.
This course is designed for MBA students who seek to understand the forms of risk capital available to grow social ventures “to scale,” because they plan to: (a) pursue social entrepreneurship as a career; b) pursue a career in social venture finance; or (c) support social ventures at some point in their career as board members, investors, or advisors. Students with venture capital experience are welcome but may find some material repetitive.