Stuart Minnaar and Andrew Wong are driven by a common goal: to use their social impact venture to drive the social change conversation in the MBA classroom, and build the infrastructure for business to enact positive social development.
Together they launched Fundie Ventures, one of Europe’s first student-led social impact venture funds, after meeting at IE Business School. Stuart was an MBA student, Andrew a US MBA grad studying for a Master’s in Advanced Finance.
They are currently acting as a new venture consultancy while they raise their own fund, alongside work to set up funds at other schools in Europe—they work closely with IESE, in Spain, and Ecole des Ponts, in France.
“We offer them what we’ve built in the past years,” Stuart explains. “We label it for different business schools so all they have to do is plug in the students and go.”
Their plan, they say, is to branch out to the top 10 business schools in Europe over the next year and a half. They offer those schools the same consultancy expertise they’ve developed with Fundie Ventures.
“First, we do investment readiness, so if we find a company that is ready for investment we will source funding for them,” Andrew says, “and then the other value is if we find there are gaps within the startup—whether financial valuation, or strategy consulting—that’s something that we offer them as well.”
The idea was driven by a sense of responsibility, says Stuart. There he was, at IE Business School, with an opportunity to do something about the way business is perceived in the 21st century.
“Before I studied I wanted to change the shift in the way we do things,” he explains. “Business, people, and planet should be in harmony. I wanted to set something up that has a legacy beyond us when we’re not students.”
That conversation needs to be a vital part of all MBA classrooms, but Fundie Ventures have their work cut out in Europe to catch up with impact investing levels across the Atlantic.
“60% of capital deployed comes from the US, or originates from the US,” Andrew explains. “That’s echoed in the amount of activity at business schools in the States. I think it’s a good indicator of how far along they are.”
Fundie Ventures, he hopes, is the model that will help further establish the ecosystem in Europe. There may even be scope to develop the idea in the US.
In the US, Andrew says, he sees a lot of traditional VC funds and wealth management firms, and within that area there’s a sub section made up of a small group of student-led VC impact funds. Their idea seems to have hit upon a niche in the market, though.
“You don’t see much in terms of consulting and capacity building,” he adds. Fundie Ventures’ working thesis is to divide between finding good startups and vetting them—that’s where the gap in the market is, says Andrew.
The University of Michigan’s Ross School of Business launched its first student-led VC fund out of its Zell Lurie Institute (ZLI) more than 20 years ago.
The Wolverine Fund—launched in 1997 with the aid of an anonymous $2 million donation—kicked off Michigan Ross’s commitment to teaching students how to invest.
Working with local VCs students quickly learned the ins and outs of the local investment world, before the fund incorporated a for-credit course into the MBA curriculum.
“The local investment community on the board found a lot of benefit from the due diligence done by the students,” says Stewart Thornhill, executive director of the Zell Lurie Institute. “They would bring things to the table VCs might not have had time to uncover.”
Ten years later, the Frankel Fund—now the Zell Lurie Commercialization Fund—launched, which focuses on early stage companies. Alongside that, now in its seventh year, the Social Venture Fund focuses on anything between angel and VC investment, and exclusively focuses on socially driven for-profit businesses.
The Zell Lurie Institute continued to grow with the Zell Early Stage Fund—run by undergrads and focusing on late stage angel, and early stage VC investing.
The most recent addition, says Stewart, is the Founders Fund. It recruits one student from each of the other funds and invests in companies led by recent graduates of Michigan Ross. It’s also the only fund that doesn’t offer course credit.
Impact investing is popular, explains Stewart, with between 120-and-150 students across the four for-credit funds.
The most difficult thing for them to learn, he says, is the slow process of investing—what can often feel like a very slow jaunt to progress. But, those that persist are set to learn a plethora of skills that will serve them well in the wider world.
“When a group of students goes and does due diligence on competition, they will often come back with things the entrepreneur might not have come back with,” says Stewart.
“If they become entrepreneurs [themselves] and have to find their own financing, they’re not going to be walking in like lambs to the slaughter. They will know what a good investment pitch looks like.”
Wiles Kase is one such MBA student who found himself venturing into the Zell Lurie Institute. He entered with no investment experience, and after six months became the director of operations for the Social Venture Fund.
“That’s when I really started to sink my teeth into the nitty gritty of the deals we were doing,” he says, “and I learned so much about structuring deals, and gaining access to capital.”
Wiles echoes Stewart’s point that MBA students come out of the funds with an exceptionally well-polished skillset in due diligence.
“It’s not something you can really access through coursework,” he adds. “You go through the process five or 10 times before meeting the venture capitalist for the first time.”
He says it made him ponder why doctors are so “awesome”—so focused and prepared. “It’s because starting in their second year of med school they are working in the hospital, accumulating real life experience, making decisions, and caring for patients,” he says.
“Other disciplines lack that level of consistent, long-term practice, [but] the ZLI’s funds provide exposure to real decisions, risks, and outcomes in an investment setting so that students leave the program ready to lead and make decisions on issues of consequence.”
Julia Enyart, an MBA graduate from Wharton, had a similar experience at Wharton Impact Investing Partners, the school’s student-led impact investing program.
She says that the key benefit for her was a thorough understanding of the investment cycle from start to finish.
It’s exposure to the way venture capitalists think, she adds. “An Investment Committee (IC) will expect you to know the business model of the startup you’re pitching backwards and forwards, and to have spoken to actual consumers who have used and (hopefully) liked the product.”
Julia says that you are fully schooled in the negotiation skills needed to convince an Investing Committee. She adds that you begin to understand that investing requires real traction and a viable, profitable business model—invaluable knowledge to any keen entrepreneurs.
The most important piece of knowledge she acquired though, was that you’re not a cheerleader when you’re pitching to the Investment Committee.
“Adopting a skeptical tone versus an enthusiastic one is much more convincing,” she says. “Remaining fact-based, thoughtful, and anticipating the IC’s concerns shows you’ve deeply thought through the risks of the investment, and that you’re not so married to the company that you’re blinded by its weaknesses.”
As someone who used to work in international development, Julia is excited by the opportunities on offer for social ventures to drive meaningful, social development around the world.
“I have only worked in jobs where I’m part of something bigger than myself. I see impact investing as an absolutely crucial tool in an era where dwindling foreign aid and weak government leadership will prevent us from [tackling] widening global disparities.”