Fridays from the Frontline: NYU’s Student-led Impact Investment Fund Completes Its First Deal
If you want to understand some key hallmarks of the MBA experience, look no further than NYU’s Impact Investment Fund (NIIF). First, it’s student-led, giving participants hands-on leadership experience and skills that translate to real world success. Second, it represents the educational advantage of being part of a larger university–NIIF was born out of collaboration between the NYU Stern School of Business, the Law School and the Wagner Graduate School of Public Service. And what’s more, it represents the ideal goal of blending business and social impact.
Recent Stern & Wagner double-degree student Gabriel Ng ’19 recently shared with Clear Admit his experience with NIIF and the educational journey to its first deal. Read on for some on-the-ground insights.
NYU’s Student-led Impact Investment Fund Completes Its First Deal
by Gabriel Ng MBA/MPA ’19
This past June, the NYU Impact Investment Fund (NIIF) completed its inaugural investment, subscribing for $30,000 of convertible notes issued by Sapient Industries, an exciting Philly-based start-up that uses a combination of smart hardware and machine learning algorithms to reduce energy waste in commercial real estate. I’m extremely honoured to have played a modest part in this deal, which demonstrates in very real terms the growing realization at graduate schools, and indeed, in society as a whole, that investing can align financial and social returns.
My own impact investing journey
How did I end up at NIIF? After my B.A., I worked as a corporate lawyer for five years, learning an enormous amount; however, I always felt that I wanted a career with social impact at its center. Not entirely knowing what that would look like, I decided to do a dual MBA/MPA at NYU Stern and NYU Wagner. The dual degree, which focuses on the intersection of the private sector and social good, introduced me to impact investing.
Impact investing is founded on the understanding that it is possible for companies, or “social enterprises,” to make both money and a positive difference in the world: think a manufacturer of solar-powered lamps, which replaces dirty kerosene ones, or a chain of low-cost gyms to expand access to exercise. These companies, like any other start-up, need capital and expertise to grow; impact investors provide those, and reap a dual financial and social return.
Classes and events at Stern and Wagner helped me understand the sector. I also participated in competitions, flying to Hong Kong after making the finals of the Morgan Stanley Sustainable Investing Challenge, and making the (much shorter) trip to Wharton to compete in the MBA Impact Investing Network and Training (MIINT). The latter served as a “dry run” for NIIF.
NIIF is a student-led impact investing fund at NYU. Formed uniquely as a collaboration between NYU’s Stern School of Business, Wagner Graduate School of Public Service, and Law School, and funded by the generosity of alumni donors, we look to take equity or debt positions in promising social enterprises that have the potential to deliver real impact as well as a financial return. Stern and Wagner students participate in NIIF on a for-credit basis and are divided into deal teams, focusing on different sectors. I was elected to serve as President of the Student Advisory Board, which consists of the deal team leaders. Throughout, we were provided invaluable guidance from our faculty and administrative advisors, Scott Taitel and Bryan Ramos.
With the deal teams assigned, students began sourcing potential investees. Every venture capital firm knows that this is quite possibly the most important stage of the deal process – you can’t invest in a winner if it never pops up on your radar. For many of us, this was baptism by fire, as it involved many cold calls and plenty of dead ends. For those students interested in a career in social impact though, this was also a great excuse to start building our contact lists. Sapient was surfaced by the Environment and Energy deal team, through Urban X, a tech accelerator – and we were off to the races.
Sapient was one of many amazing social enterprises that we had identified and engaged in initial round discussions. The next step after sourcing these companies was to conduct due diligence on them: finding out more about the company and making sure it would be a good investment for us. This involved frequent discussions with executives, building a financial model to project the performance of the company, and our law school colleagues surfacing any potential legal risks.
Investment Committee presentations
After due diligence, we had narrowed it down to two companies: Sapient and an ed-tech start-up. The deal teams had done their homework and now it was time for a decision. Both social enterprises were presented to NIIF’s investment committee, made up of NYU alumni who worked in the impact investing sector. They took their role seriously, grilling the students on the financials, the potential social impact, and the risks. After extensive deliberations, the committee decided to approve an investment in Sapient.
I’m now back in London, having graduated, and about to start work at Big Society Capital, an impact investing fund. Looking back, there is no doubt in my mind that the experience and skills I gained by working with NIIF helped me get this job (not least by giving me plenty of things to talk about in my interview!). I am so proud of the work that the entire NIIF team put into the fund this past year, and, with our first investment under our belt, I am confident that we’ve laid the foundation for its continuing success.
Photo credit: Erik Bardin (leading photo, Washington Square Park)