Blog: Lessons of Love and Finance in Impact Investing
By Emily Litwin
“All you need to know is that finance is love.” Gautam smiles, adding, “And compounding.”
If only impact investing were that simple. In the burgeoning field, the University of Michigan’s Social Venture Fund has helped pave the way, in large part due to the unwavering support and leadership of the John C. and Sally S. Morley Professor of Finance, Gautam Kaul. Or, as many of the students on the fund prefer to call him: G.
Becoming a member of the Social Venture Fund is perhaps the most authentic opportunity for “action-based learning” at the Ross School of Business. Fund associates source business plans, evaluate the most promising among them through a meticulous due diligence process, and provide capacity building support for portfolio companies. To be eligible to participate in the investing process, each Fund member must enroll in Gautam’s Impact Investing course. The course is the product of three years of collaboration among Gautam and Fund members, who tweak and improve the content and delivery each year. The SvF leadership team members rotate in throughout the semester as guest TAs and JP Asta, SvF Co-Director of Operations, wrote a case study of a 2011 SvF investment decision that was used as a teaching tool.
The co-creation of the course provides an excellent example of action-based learning. Moreover, Fund members are afforded the opportunity to learn from classmates who are not tied to SvF and enroll in the course individually. It is refreshing to hear new perspectives and opinions on the subject that we, as Fund members, focus so much of our time. Discussion often covers how to best measure social impact, and the debates often carry over into Fund meetings where we try to compare the value of a health-focused firm with one that reduces carbon emissions. How do you compare apples to oranges? Is it even appropriate to? These are some of the questions Fund members tackle with over the course of two years and it helps to have outside perspectives from our classmates.
Gautam waxes poetic on finance and love in every session of the course. The passion he brings to the subject is contagious. Finance 636: Impact Investing provides a foundation from which all Fund members are able to develop an understanding of the field. It is also a right of passage by which we all fall under Gautam’s spell and begin to think of finance as love.