The Student-Managed Impact Venture Fund: An Overview for Students & Others
Impact is surging at business schools, and one of the clearest examples is the rise of the student-managed impact venture fund (SMIVF). Managed by students, SMIVFs invest in high-growth organizations with the intention to generate positive, measurable social and environmental impact alongside financial return.
Between 2019 and 2021, these funds nearly doubled in number and can now be found at most top business schools in the United States, as well as around the world. They represent a growing belief that business and impact can and should co-exist.
Hundreds of future leaders are being educated through SMIVFs. Yet, virtually nothing has been written about SMIVFs.
I graduated from Stanford’s Graduate School of Business (GSB) in June 2021, where I had the chance to co-lead the GSB Impact Fund, the largest SMIVF. 156 MBA students applied to the GSB Impact Fund during the 2020–21 academic year and 69 ultimately participated — about 37% and 16%, respectively, of the typical GSB class of 420 students.
While leading the GSB Impact Fund, I received emails from students at other schools looking to launch SMIVFs of their own. This inspired me to found the Student Impact Fund Collaborative, a global collection of SMIVFs and other student-managed impact funds.
As I pass into alumni-hood and watch the next cohort of leaders take both the GSB Impact Fund and Collaborative to greater heights, I want to share what I and the Collaborative have learned about SMIVFs.
This piece is an overview of SMIVFs, informed by individual conversations, Collaborative events, and a survey conducted by the Collaborative. My hope is that it serves several purposes:
- Most importantly, for students — a guide for those involved in SMIVFs or looking to launch their own;
- For impact entrepreneurs — an introduction to a rapidly growing source of funding and collaboration;
- For the impact investing community — an invitation to mentor and develop the next generation of impact investors;
- For alumni — an update on an inspiring movement you can support at your alma maters;
- For business schools — a call to empower your students in becoming stewards of social and environmental progress; and
- For everyone — a notice that tomorrow’s leaders may elevate impact like never before.
Sections I and II contextualizes SMIVFs, including how they fit into the broader investing universe and the broader trend towards impact currently playing out around the world. Section III introduces the Collaborative. Section IV, the bulk of this piece, summarizes the SMIVF landscape, including scope, structure, focus, process, and outcomes. Section V concludes.
I. Context
SMIVFs lie at the intersection of venture funds, impact funds, and student-managed investment funds:
Venture Funds
Venture capital funds provide financing to startups, early-stage, and emerging companies in exchange for equity in these companies. Nearly $400 billion of venture capital funding was deployed worldwide in 2020, and nearly $300 billion has been deployed in the first half of 2021 alone.
Impact Funds
The Global Impact Investing Network (GIIN) defines impact investing as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” As depicted in Figure 2 below, impact investing funds fall in between traditional investing, which solely targets financial returns, and philanthropy, which solely targets social and environmental impact. Often, the dual impact fund mandate is referred to as the “double-bottom line”: impact and risk-adjusted returns. The GIIN estimates that over 1,720 organizations manage $715 billion in impact investing assets as of the end of 2019.
Student-Managed Investment Funds
Student-managed investment funds (SMIFs) are investing funds managed by students. These funds are typically launched to provide experiential learning opportunities for their students.
SMIFs span the impact-returns spectrum. At the far left end of the spectrum, there are multiple SMIFs that do not consider impact, including school-specific funds and the cross-school Dorm Room Fund focused on student entrepreneurs (and its international sisters, the Creator Fund in London and Campus Fund in Asia).
Moving right, a subset of SMIFs do indeed consider impact. The Sustainable & Impact Investing Learning & Knowledge (SIILK) Network provides various resources for such funds, including a toolkit and a recent report on the student-managed investment funds involved in their network. These include negative screening, responsible investment, and impact investing models, across both the public and private markets.
SMIVFs
SMIVFs lie at the intersection of these three types of investment funds. Like venture funds, they target startups. Like other impact funds, they seek impact and risk-adjusted returns. Like other SMIFs, they are led by students — their primary purpose is to educate students about impact investing. The GSB Impact Fund describes the combined SMIVF mandate as the “triple-bottom line”: education, impact, and returns.
Much has been written about venture and impact investing broadly, but little, if any, of this focuses on SMIVFs. Similarly, while SIILK has written about their network of SMIFs that consider impact, the majority of their funds do not focus on impact investing or venture. Moreover, many SMIVFs are not part of their network. As far as I know, this is the first generally available piece of writing on SMIVFs.
II. Rise of Impact in the Private Sector
The rise of SMIVFs is not happening in isolation — it traces a broader, ongoing push towards impact from within the private sector. While those in the public and nonprofit sectors have long focused on creating positive social and environmental impact, this mission has spread to the private sector in unprecedented ways in recent years. The surge can be seen among investors, businesses, and the public.
The growth in SMIVFs is one part of a general rise in impact investing. Impact investing has exploded in recent years, crossing a $715 billion market in 2019 as discussed above. More broadly, $31 trillion of investments considered environmental, social, and governance factors in 2018, including a quarter of professionally managed assets in the US and half of those in Europe.
On the other side of the equation, impact entrepreneurs are also on the rise. One in four new enterprises set up in the European Union are social enterprises. B corporations, a relatively new type of company that must prove positive social impact, now number over 3,700 across 150 industries and 74 countries.
Even companies not explicitly focused on impact are increasingly prioritizing impact. Two-thirds of companies rate “progress towards inclusive growth/sustainability” as one of their top three concerns. Moreover, corporations are now the leading donors to racial equity causes, giving three times more than foundations and nearly seven times more than individuals.
People support this, especially young people. 39% of millennials believe businesses should “improve society,” eclipsing other priorities like “innovate” or “generate profit.” And over ten thousand MBA students and alumni have signed the MBA Oath pledging “to create value responsibly and ethically.”
This collision of business and impact is only accelerating as COVID-19, climate change, the Black Lives Matter movement, and other recent events force a social reckoning. A 2021 survey reveals that across the globe, business is now the only institution seen as both ethical and competent. As trust in government, the media, and other institutions declines, people are turning to the private sector for impact leadership.
I hypothesize that SMIVFs provide a peek into the future of how impact will interplay with returns. SMIVF members are perhaps the young people most inclined to lead impact funds or otherwise work at the intersection of impact and returns in the future. What they learn from, how they lead, and their experiences at SMIVFs will shape their mindsets and tomorrow’s investing and business practices.
III. The Collaborative
We launched the Student Impact Fund Collaborative during the 2020–21 school year to support and harness the momentum being created by student-managed impact funds.
A global coalition of student-managed impact funds, we are mobilizing our generation to build a world where businesses and leaders are stewards of social and environmental progress. We do this by helping student-managed impact funds launch, learn from another, collaborate, build community, and mobilize around impact. We are the only such cross-school student network, filling an important gap in organizing the next generation of impact leadership.
IV. Landscape
This section attempts to describe the full landscape of SMIVFs. In building the Collaborative, we reached out to our networks to try and discover and include the entire SMIVF universe. We unearthed 18 SMIVFs, including 14 that have joined the Collaborative and 4 that we have been unable to get in contact with (see Table 1).
While the Collaborative also includes other impact-oriented SMIFs, we do not include them in this analysis. For instance, Columbia’s Microlumbia makes debt investments. Duke’s Fuqua Sustainable Impact Student Investment Fund and Berkeley’s Sustainable Investment Fund make public investments. These are separate strategies that warrant reports of their own.
There are also multiple impact investing competitions for students, such as the Turner MBA Impact Investing Network & Training (MIINT) Competition and the Kellogg-Morgan Stanley Sustainable Investing Challenge. Along with SMIVFs, students from other schools that do not have SMIVFs of their own may also compete — such teams are not covered in this report.
To understand the landscape and needs of SMIVFs, the Collaborative conducted a survey of our membership during the spring, summer, and fall of 2021 (thanks to my co-conspirator, Andy Noone). We also hosted a workshop for new SMIVFs (co-organized by Pooja Eppanapally, Janet Genser, and Juhi Abdul Latif) and supported numerous conversations (a joint effort by the entire founding Collaborative team but especially Everett Allen, Sam Buck, Anny Dow, Stu Fram, Nina Greenebaum, Nathan Hixson, Natalia Kruger, Julian Luria, and John Pontillo). We supplemented this with online research on the SMIVFs not part of the Collaborative.
What follows are key learnings, including SMIVF scope, structures, investment focuses, investment processes, outcomes, and challenges. To some extent, this section presents the questions a new fund faces, and the possible choice set of answers.
Scope
Number of Funds
There are at least 18 SMIVFs around the world. These funds are concentrated at business schools, including 7 of the top 10 business schools as ranked by the US News & World Report. 4 also involve other graduate students, while NIIF includes undergraduates, and NUImpact is housed at the undergraduate college.
While SMIVFs have been around for over a decade, they’ve only surged in number recently (see Figure 3). The University of Michigan’s Social Venture Fund pioneered the SMIVF model in 2009. This was followed by funds at Stanford GSB, Dartmouth Tuck, Northeastern, IESE, NYU, UCLA Anderson, Miami Farmer, UPenn Wharton, and PSU over the next 10 years. The progression dramatically took off in 2020 and 2021 — the number of SMIVFs almost doubled from 10 to 18 during these two years.
Based on conversations with new SMIVFs, the recent rapid growth reflects the broader shift towards impact spurred by the COVID pandemic and social movements around issues like climate change and Black Lives Matter. It both prompted the formation of the Collaborative and has been supported by the Collaborative.
Throughout this report, it is helpful to draw a distinction between mature SMIVFs i.e., the 10 founded before 2020, and new SMIVFs i.e., the 8 founded since. It is also helpful to refer to our 11 core survey respondents, which include the 6 mature funds that are part of the Collaborative (those housed at the University of Michigan, Stanford GSB, Dartmouth Tuck, UCLA Anderson, IESE, and UPenn Wharton) and 5 new funds with defined models (those housed at Berkeley Haas, University of Michigan (climate fund), LBS, Chicago Booth, and IIM).
Most SMIVFs are in the US, but there are also 2 in Europe and 1 in Asia. Those in the US are concentrated in the Northeast (see Figure 4).
Number of Students
At least 409 students were part of SMIVFs during the 2020–21 academic year. This included 287 MBA students, 68 other graduate students (e.g., MSx and MPA students), and 54 undergraduate students.
SMIVFs vary in size. Of the 8 mature SMIVFs and 5 new SMIVFs with data, most had 20 to 45 members. 3 were particularly smaller with under 10 members, including 2 very new SMIVFs. The two oldest were the largest — University of Michigan’s Social Venture Fund had 54 members, while the Stanford GSB Impact Fund had 76, collectively representing nearly a third of students involved in SMIVFs.
Assets Under Management
Collectively, SMIVFs have over $3 million in assets under management. This is negligible relative to the larger impact investing universe, but as discussed below, SMIVFs may generate a disproportionately large bang for their buck. Of the 4 mature funds and 4 new funds with data, AUM range from about $35,000 to $1 million (see Figure 5).
Structure
SMIVFs are structured in different ways. We focus on our 11 core survey respondents in this section.
The School Relationship
While SMIVFs are led by students, they often receive strong support from schools. This can include:
- An official home in a school entity e.g., the GSB Impact Fund sits under the school’s Center for Social Innovation
- School staff support
- Assistance in raising capital
- Being launched, sponsored, and/or supported by a faculty member
Anecdotally, strong school support seems to be a key driver of success.
The Student Experience
SMIVFs use a combination of courses and clubs to structure the student experience. Half (5) are built solely around courses, 3 are built solely around clubs, and 2 use courses and clubs (see Figure 6).
Most (7) require commitments of 1 year, while 2 require a shorter commitment of 1 semester or 2 quarters and 2 require a longer commitment of 2 years (see Figure 7). These commitments can range in intensity. For example, at the GSB Impact Fund, we expect members to spend 5–10 hours per week.
Capital Management
SMIVFs capitalize and structure funds in different ways (see Figure 8).
3 funds receive an allocation from their school’s endowment, including 1 that also receives separate donations. For these funds, all returns stay in the endowment.
3 funds are capitalized through single major gifts. Each of these funds holds capital in a different location — in the school’s foundation, in a special account managed by the school, and through a custodian.
The final 5 funds rely on multiple donations, which are generally held in donor-advised funds (DAFs), or tax-sheltered giving accounts. Impact Assets is a favorite DAF-provider among SMIVFs.
When SMIVFs are funded through major gifts and donations, they do not owe donors any returns. However, there may be other commitments. For example, DAFs require all assets to ultimately be given away to charitable organizations.
Many SMIVFs are evergreen, meaning capital is incrementally added without any fixed fund end time horizon.
Investment Focus
SMIVFs are focused on different parts of the venture market, including by venture stage, deal type, returns profile, impact focus areas, and regional focus areas.
Venture Stage
All 12 funds with data are early-stage, with 11 investing in pre-seed ventures, 10 in seed ventures, and 5 in series A ventures (see Figure 9). Some set further parameters based on deal size. For instance, the Berkeley Haas Impact Fund only invests in ventures that have raised less than $1 million.
This stage focus aligns with the relatively small AUMs of most SMIVFs — most can only finance the small check sizes suited for small rounds. Indeed, 4 of the 11 SMIVFs with data have typical check sizes of $20–30,000, 1 has a typical check size of $30–40,000, 4 have typical check sizes of $50–60,000, and the final 2 have a typical check size of $70–80,000 (see Figure 10).
Deal Type
Turning to deal type, of the 11 funds with data, 9 are open to making equity investments, while 8 consider convertible notes, and 6 consider SAFE notes. The Tarrson Impact Investment Fund is also open to debt (see Figure 11).
Returns Profile
A critical question for impact funds to consider is the tradeoff between impact and returns.
Some impact funds seek market-rate returns, or risk-adjusted returns commensurate to what’s possible from traditional non-impact investing. Inherent in this strategy is a belief that it’s possible to “have your cake and eat it too” — you can do good in the world while not sacrificing returns.
Other impact funds accept concessionary returns, or below-market returns in exchange for increased impact. Such funds may focus on the concept of additionality — is the investment creating true additional impact beyond what would have been created in the world without it?
Two-thirds of the funds with data seek only market rate returns (see Figure 12). Only three also accept concessionary returns (the GSB Impact Fund, Michigan Climate Venture, and IIM’s Impact Fund). The GIIN reports a similar split in the impact investing industry as a whole.
Impact Focus Area
Social and environmental impact can take many forms. The 13 SMIVFs we have data on focus on a number of impact sectors (see Figure 13). In order of popularity, these include: energy & environment (all 13 SMIVFs), health & wellness (12 SMIVFs), food & agriculture and education (11 SMIVFs each), financial inclusion / fintech (10 SMIVFs), justice and development (5 SMIVFs each; justice includes racial, economic, and civic justice; development includes housing, community, and urban development).
Most SMIVFs have 4–6 sector focuses, but others have more (see Figure 14).
Regional Focus Area
Some funds focus on specific regions. For instance NUImpact focuses in Boston, and PSU’s Impact Ventures focuses on the Pacific Northwest. Regional focus can focus impact as well as allow funds to better support their ventures. However, given the location of most SMIVFs, focusing on nearby areas may direct capital to regions (like the US) with the most resources, potentially limiting impact.
Investment Process
Beyond traditional investment processes of sourcing, diligencing, making investment decisions, and portfolio management, SMIVFs also train members and receive support and mentorship from partners and advisers.
Training
Unlike traditional impact funds, a central mission of SMIVFs is to educate members on impact investing. Hence, training is often a core part of the annual investment process.
SMIVFs structure training in different ways. Of the 11 core survey respondents, the majority (9) develop their training in house. For those with classes, these trainings are often developed and administered by school faculty. For those with club models, these trainings are often developed and administered by students. 5 funds rely on MIINT resources, including 2 that exclusively use MIINT (see Figure 15).
Sourcing
Like the broader impact fund universe, SMIVFs discover deals from a variety of sources. These include:
- School networks — including students, alumni, professors, and school entrepreneurship programs
- Partners — including advisers, co-investors, and MIINT
- The broader field — including accelerators and other investors
- Inbound interest — including through fund emails and websites and personal LinkedIn profiles
SMIVFs treat ventures started by classmates in different ways. For instance, the Stanford GSB Impact Fund does not consider ventures led by current GSB students to avoid conflicts of interest.
Diligence
SMIVFs tend to model diligence processes after traditional impact funds. All 8 with data use investment memos and criteria. For instance, the GSB Impact Fund developed a set of 10 criteria, including 5 related to returns and 5 related to impact. 7 have students make pitches.
Investment Decisions
SMIVF investment decisions are made by three core groups of individuals. At almost all of the funds with data (9 out of 12 SMIVFs), outside experts are involved in the final decision-making process. 8 also involve students and 5 also involve professors (see Figure 16).
While some funds have a continuous investment process like traditional impact funds, others make all their investments during a specific window. For instance, the Stanford GSB Impact Fund uses the fall quarter to recruit students; the winter quarter to train students, source deals, and conduct diligence; and the spring quarter to make investment decisions.
Advising / Partners
SMIVFs can benefit from industry advisers and partners. At least 5 SMIVFs have defined external relationships. These can be partnerships intrinsic to the model — for instance, Omidyar Network is helping launch Indian Institute of Management Udaipur’s impact fund, and Miami University’s Social Impact Fund makes its investments in partnership with Flywheel, a social entrepreneurship accelerator in Cincinnati. These can be advisory — for example, each of the 7 deal teams of the Stanford GSB Impact Fund has mentors from an industry fund, and Portland State University’s Impact Ventures similarly partners with outside funds. Finally, these can support sourcing — for example, IFIC partners with Impulse4women. Like all impact funds, SMIVFs may also benefit impact investing communities, such as the GIIN and the SIILK Network.
Portfolio Management
As SMIVFs age and spread, the number of ventures funded by SMIVFs grows. 47 ventures have received SMIVF funding from 9 SMIVFs to date (see Figure 17). These include 15 from Michigan’s Social Venture Fund, 14 from the GSB Impact Fund, 5 each from the Tuck Social Venture Fund and Anderson Venture Impact Partners, 3 from NUImpact, 2 from NIIF, and 1 each from IFIC, the Haas Impact Fund, and the Tarrson Impact Investment Fund.
This number is expected to accelerate upwards in coming years — the above SMIVFs anticipate making at least 13 new investments next year alone, while the other 9 SMIVFs will make investments of their own.
Older SMIVFs have begun experimenting with portfolio support and management models. For instance, the GSB Impact Fund has a dedicated portfolio support team of students interested in social entrepreneurship. This hands-on team provides portfolio companies advisory services in areas such as fundraising support, growth strategy, product strategy, and efficacy and impact evaluation. It also builds a community amongst the portfolio.
Outcomes
While intentions, structures, and strategies matter, ultimately outcomes are what drive impact. Older SMIVFs are beginning to explore their outcomes. Most publicly, the Tuck Social Venture Fund and NIIF publish annual reports, including on outcomes.
Measuring and managing outcomes was a substantial focus during my time leading the GSB Impact Fund. Along with other fund members (Belinda Niu, Andrew Cryer, and Morrison Mast), I conducted an in-depth evaluation of the GSB Impact Fund’s impact to date. Our overall finding was that while the GSB Impact Fund has limited AUM and check sizes, it may have outsized impact due to its ability to connect ventures to Stanford talent, faculty, and branding, as well as its hands-on portfolio team. This may extend to other SMIVFs.
Drawing from this and other materials, I developed a framework for impact measurement and management at SMIVFs. My overarching recommendation is that it should span all three SMIVF bottom lines: education, impact, and returns. Going backwards:
- Returns measurement best practices are well established in investing. Michigan’s Social Venture Fund is the only SMIVF with realized returns to date — they have seen 6 liquidation events, including recent successful exits in both the Community Development and Healthcare space. Given how new other SMIVF investments are, other return outcomes are unrealized.
- Impact measurement is a rapidly developing space in impact investing and other impact sectors. As discussed above, older SMIVFs are beginning to explore both the impact of the ventures they invest in, as well as the impact of their specific investment.
- Education measurement best practices are new to the investing world, but related to a lot of work in the education sector. For the GSB Impact Fund, we pulled from student and alumni survey results and outcomes. In many ways, our over 250 alumni may be our largest impact in the world.
I am a demonstrative case study of the educational impact of SMIVFs. Coming in, I had never worked in business, let alone investing. By the time I left, I was running an impact fund, teaching our 76-member team about impact investing, advising students at other schools on SMIVFs, an invited judge for the largest education venture competition, and an invited speaker on a VC podcast. Beyond direct impact investing experience, the GSB Impact Fund taught me to be a more effective impact leader. Our seven verticals heightened my understanding of different impact sectors. My work in outcomes measurement and management applies just as much to impact at large. Leading the GSB Impact Fund forced me to apply and hone in real time the leadership skills I was learning in business school — including hiring, supporting my team, creating systems of feedback, having difficult conversations, and branding and marketing. Finally, the GSB Impact Fund and Collaborative have gifted me an incredible community of peers and mentors.
V. Conclusion
When I told my friends and mentors that I was considering business school at Stanford, they were almost uniformly confused: what purpose does a social impact junkie from the policy world have at business school?
The bottom line of business is creating profit. My bottom line is advancing opportunity. Prior to business school, I worked at the White House, in policy advocacy, in economics, and in community organizing — nowhere near business.
Now I know. To the extent that I end up making the world a better place, it’ll be in a large part due to my time at the GSB…and specifically, due to my time at the GSB Impact Fund.
I do not stand alone. A wave of future impact leaders are being trained at business schools… and specifically at SMIVFs. My hope is that this piece can support this growing tide.
To connect with the Collaborative or its members, email the current chairs, Anny Dow (Stanford GSB) and Raabia Budhwani (Chicago Booth), at impactfundcollab@gmail.com.
