I came to the Erb Institute because I believe that business represents the greatest opportunity to solve our most pressing social and environmental problems. Because most established corporations focus on increasing profits as their sole purpose, I suspect that it will be a long time before those companies do much more than lessen their footprints. I believe that entrepreneurs who are creating ventures with social and environmental purpose tied directly to their business models are the ones who will be major change agents. Those entrepreneurs need capital and investors who share their sense of purpose, and that is why I want to go into impact investing.
There is not much of a playbook for how to break into the industry, and while my journey is only a couple months in, I thought I would share what I’ve learned so far for other interested students. My sense is that—with the industry’s growth trajectory and the momentum of young professionals prioritizing social impact in their careers—interest will only grow.
My early attempts to navigate the industry include attending the SOCAP conference in San Francisco in October. SOCAP, or Social Capital Markets, is the marquee event for impact investing in North America. This year, it attracted 3,000 attendees and 700 speakers, representing a network of investors, entrepreneurs and social impact leaders. Here’s some of what I gleaned.
Step 1: Know what you’re getting into.
MBAs know well that breaking into traditional venture capital (VC) is exceptionally difficult. The most common advice from alumni is to either go into investment banking or gain industry expertise and try VC later in your career. The same—but worse—can be said about impact investing, because there are simply fewer firms, even fewer positions, and not many people who have already made the leap and could offer guidance. Your process will not be your classmates’ well-groomed consulting or investment banking recruiting path, and it’s important to own that. With few exceptions, most firms do not have an official internship process, and all hiring will be “just in time.” It’s up to you to make it happen.
Step 2: Take advantage of your university’s resources.
Nine years ago, the University of Michigan started the first student-led impact investing fund, and many programs have followed suit. I am fortunate to be an associate on UM’s Social Venture Fund (SVF), which has been a tremendous learning experience. It enriched my experience at SOCAP in two ways. The first is that I was able to play the role of investor to many social entrepreneurs who were interested in becoming a portfolio company of SVF. The second is that many prominent players in the space knew the SVF name, which helped me spark interesting conversations with investors. One highlight was chatting with Sean O’Sullivan, founder and managing partner of SOSV, which co-invested in SVF’s portfolio company, Powerhouse Dynamics, and had invested in two early-stage companies that SVF is considering. It was validating to chat with Sean about these companies and our shared interest and belief in the cellular agriculture movement.
If your program does not have a fund or you are unable to join, don’t worry. Plenty of other opportunities exist, such as centers for entrepreneurship, local competitions, investment challenges and other university-agnostic competitions like the Kellogg-Morgan Stanley Sustainable Investment Challenge.
Step 3: Identify where you can add the most value and which type of impact resonates most with you.
Impact investing encompasses a broad spectrum of investors, from large foundations like W. K. Kellogg to funds like DBL Partners, which is structured more like a traditional VC and seeks market-rate returns. In between lie advisory firms like Avivar Capital and niche consulting firms like Tideline. Each of these firms and the people who run them define and measure impact differently. This year at SOCAP, the impact themes were centered around the United Nations Sustainable Development Goals.
As an initial step in evaluating your place in the industry, I recommend figuring out the impact lens that resonates most with you and which type of firm you are most interested in. Ideally, this ties into your background and strengths. For example, I have a background running business development for tech startups and am most passionate about investing in racial and gender equity and environmental issues with a market-rate return. I met a few people at SOCAP from firms that meet those criteria and to which I think I could add value.
Step 4: Network, network, network.
When looking for internship and work opportunities off campus, networking is crucial. When those opportunities are rare, it becomes even more important. Be genuine in your outreach and try to add value where you can. For example, you might offer to do a research project for a prospective firm’s portfolio company or share a deal you found that you think meets their investment thesis.
If you have the opportunity and are serious about impact investing, go to SOCAP. It is the most comprehensive gathering of all of the major and upcoming players in the space. And about 30 Michigan alumni attended, including leading fund managers and three Erbers.
Finally, a few resources and quick tasks to jump-start your research and learning: