Investing in Impact Entrepreneurship: Matt Nash, Anisha Mudaliar, Hamza Farrukh, Noelle Eveland

Key Concepts

• Social Entrepreneurship
• Impact Investing
• Impact Measurement
• Social Innovation
• Ecopreneurship
• Impact Ventures
• Concessionary Capital
• ESG Investing
• Climate Finance

Overview of CSI and its Programming

• Founding and Mission: The Center for Social Innovation (CSI) was founded in 1999 by Greg Dees and colleagues. Its mission is to educate insightful leaders for social and environmental change.
• Theory of Change: CSI's theory of change revolves around:
  • Helping students understand issues.
  • Building skills to manage impact organizations and ecosystems.
  • Designing and measuring impact.
  • Helping students get started in impact careers.
• Merger with Public Management Program (PMP): The PMP and CSI merged in the late 2000s (around 2008/9). CSI is the successor to the PMP and manages the Certificate in Public Management and Social Innovation.
• Team: Professor Neil Malhotra is the faculty director.
• Student Profiles: CSI serves a wide variety of students, including:
  • Leaders in corporations seeking to be more responsible.
  • Individuals transitioning between private, public, and nonprofit sectors.
  • Those with social impact backgrounds aiming to accelerate their impact.
  • Aspiring social or impact entrepreneurs.
• Student Interests: A survey of first-year students revealed high interest in education, energy, environment, climate, and financial inclusion, as well as healthcare and public policy.
• Career Aspirations:
  • 80% of students are interested in impact entrepreneurship.
  • 25% are interested in government.
  • Almost two-thirds are interested in impact investing.
• Certificate in Public Management and Social Innovation:
  • Requires courses across three distribution areas: understanding problems, designing/assessing impact, and building/managing organizations.
  • The distribution areas will be refined in the fall for the class of '27 to: understanding systems, stakeholders, and societal challenges; assessing impact; and designing and financing.
  • About a third of the class of '24 earned the certificate (157 MBAs and 12 MSX students).
  • 92% of the class of 2024 took at least one course that counts toward the certificate.
• Design for Extreme Affordability (Extreme): This class has reached more than 180 million lives through design projects with nearly 800 students in over 30 countries. Examples include Embrace (baby warmer used in Ukraine) and d.light (solar projects).
• Leadership for Society Program: Led by Professor Brian Lowry, this program includes classes and webinars. The webinars are free and open to all.
• Co-Curricular Programs:
  • Impact Fund: Engages about 80 students a year, educating them on impact investing. Aims to create positive social/environmental impacts through investments in impact ventures and generate financial returns.
  • Impact Entrepreneurship Program: Helps students launch ventures by building skills, networks, and reducing financial barriers. Includes a cohort of visiting impact entrepreneurs.
  • Financial Support:
    • Annual $20,000 prize for top five students joining impact organizations.
    • Stanford Impact Founders Fellowship: Funds five students launching impact ventures with $110,000 and coaching for a year.
    • Ecopreneurship Ventures: Funds five students launching ecopreneurship ventures with $110,000 and coaching for a year.
    • To date, ventures launched by fellows have positively impacted more than 7.5 million people in 12 countries.
    • The first 15 sets of fellows received $2.6 million and have multiplied that by 63 times in funding raised ($141 million non-dilutive and $23 million in equity funding).
  • Loan Forgiveness: Alumni working in nonprofits or government agencies may be eligible for loan forgiveness. Since the class of 22, students going into for-profit impact ventures may also be eligible (early stage, pre-series B, with impact or concessionary capital).
• Alumni Engagement: Alumni can serve as reviewers for prizes, offer feedback to student ventures, source deals for the Impact Fund, advise, and provide internship opportunities.

Panel Discussion: Investing in Impact

Noelle Evelyn (Class of '25, Co-CIO of GSB Impact Fund)

• Interest in Impact Investing: Sparked by a desire to understand how to motivate powerful entities to invest in impactful businesses and technologies.
• GSB as the Right Home: The existence of the Impact Fund and CSI, combined with Stanford's loan forgiveness program, signaled that GSB was the right place to explore impact investing.
• Engagement at GSB: Involved in the Impact Fund (deal team, then leading the fund) and impact investing classes.
• GSB Impact Fund:
  • Provides real-world experience as an impact investor.
  • Has seven deal teams (climate, FinTech, education, healthcare, urban development, and justice).
  • Aims to invest around $200k per year and has invested $1 million to date.
  • Students source, diligence, and pitch companies.
• Impact Investing Definition: A spectrum of approaches to using money to drive impact at scale.
• Impact Fund's Role: Not the leading investor, but provides value-add and demonstrates new approaches.

Anisha Mudaliar (Class of '23, Former CIO of GSB Impact Fund, VP at Jasper Ridge Partners)

• Background: Experience in management consulting (BCG, public sector) and nonprofit (Endeavor, emerging markets).
• GSB Engagement: Used GSB to explore the role of business in scaling impact, specifically impact investing.
• Impact Fund Experience: Foundational experience in developing investment theses, sourcing companies, and evaluating impact and business fundamentals.
• Impact Fund Decision-Making: Students form deal teams, develop investment theses, source companies, and present deals to an investment committee (alumni).
• Current Role at Jasper Ridge Partners: Manages $40 billion in assets for ultra-high net worth families and institutional clients. Partners with families to help them use their wealth to make an impact.
• Approach to Impact: Encourages families to start with the problem and let that guide them to the solution and capital type. Considers grant making, policy advocacy, and impact investing.
• Impact Investing Definition: Intentionally creating impact alongside generating financial returns. A spectrum from market-rate to concessionary investing.

Hamza Farrukh (Class of '25, Founder of Bondh E Shams, The Solar Water Project)

• Solar Water Project: Aims to bring innovation and technology for clean water to last-mile communities in developing economies.
• OASIS BOX: A solar-powered device that extracts water from sources like underground boreholes, filters it, and reports the daily amount of water delivered. Removes bacterial and chemical contamination.
• Impact: Delivered 1 billion cups of clean water.
• GSB Impact: Used GSB to imagine greater impact at scale.
• Certificate in Public Management: Provided a framework for thinking around impact.
• Emergence Accelerator Program (School of Engineering): Helped transition from a nonprofit model to a scalable social venture.
• IDIF (Impact Design Immersion Fellowship): Tested the scalability of the OASIS BOX beyond Pakistan.
• GSB Community: The community provides a "willingness to act," where people offer advice and connections.
• IDIF (Impact Design Immersion Fellowship): Helps test out specific ideas in the real world with both mentorship support, as well as some capital support over the course of the summer.

Suggestions for Learning More About Impact Investing

• Stanford Social Innovation Review (SSIR): Publication highlighting research and thinking about social innovation and impact investing.
• Impact Alpha: Newsletter providing updates on trends and deals in impact investing.
• Impact Frontiers (formerly Impact Management Project): Frameworks for thinking about impact measurement.
• Global Impact Investing Network (GIIN):
• Gold Standard Registry: Projects at the intersection of climate change and social impact.
• SOCAP Conference: Annual convening of impact investors and entrepreneurs.
• Investors Circle: Organization for early-stage investors.

Distinguishing ESG Investing from Impact Investing

• ESG Investing: A measurement system for companies to report how they're doing on environmental, social, and governance pillars. Focuses on avoiding bad practices.
• Impact Investing: Focuses on the intention to do good and positively impact the world.

How to Have a Company Considered for Impact Investment

• Understand the different types of impact investors (family offices, impact funds, sector-specific funds, stage-specific funds).
• Research their investment theses and ensure a good match.
• Look for inbound sourcing avenues.

Trends to Watch

• Social impact organizations tapping into climate financing.
• Generative AI applications for social impact.

Conclusion

The session highlighted the importance of social entrepreneurship and impact investing in creating a more just, sustainable, and prosperous world. CSI at Stanford GSB plays a crucial role in educating and supporting future leaders in this field through its various programs, courses, and community engagement. The panelists emphasized the diverse approaches within impact investing and the need for intentionality in creating positive social and environmental change. The discussion also provided valuable resources and suggestions for those interested in learning more about impact investing and getting involved in the field.