Among the first of its kind, the student-led Social Venture Fund at University of Michigan’s Ross School of Business recently announced an investment in Mytonomy, a social network for college and career advising. It’s the third investment the fund has made since its launch at the end of 2010.
While the amount of the investment was not disclosed, the fund invests up to only $100,000 at a time, and Mytonomy seems to feel there is other value in this kind of support.
“We’re particularly excited to engage directly with the Social Venture Fund to tap Ross’s cross-disciplinary business students as well as those from the School of Education and College of Engineering to further our mission,” Mytonomy’s chief executive and co-founder, Vinay Bhargava, said in a statement that was published on AnnArbor.com.
The Mytonomy investment was part of a seed round for the company that included funding from two other social venture funds, NewSchools and Kapor Capital.
The Social Venture Fund invests only in companies that make a positive social or environmental impact, says Owen Henkel, a second-year MBA student and co-director of the fund, which is part of the Zell-Lurie Institute for Entrepreneurial Studies.
Being part of a student-led fund forces you to think about the fundamentals of business, how each idea will make money, and how it can be sustainable, says Henkel. “It’s real life. You’re talking with real entrepreneurs from day one,” he says. “You have to put your money where your mouth is.” Most importantly, he adds, you get “into the messiness of business.”
More than 100 students typically apply for the 10 to 15 associate positions at the fund each year. The chosen few spend 15 to 20 hours per week on deal sourcing, deal management, and portfolio management. In screening investments, the students focus on four sectors: education, food systems and environment, urban revitalization in Detroit, and health, says Daniel Rosen, a second-year MBA student and a co-director of the fund. Students focus on one of the sectors based on previous experience. For example, Henkel, having been part of Teach for America, was in the “education circle.”
In spring 2012, the fund, which was born of a class gift, made its first investment in LearnZillion, an online service that gives students, teachers, and parents access to a video library of lessons taught by the nation’s top teachers. A few months later, the fund announced its second investment in Jack & Jake’s, a sustainable food provider in Louisiana. Mytonomy’s mission and creators impressed the students in the fund to make it the third beneficiary of funding from the group.
“We look for some traction in the marketplace,” says Rosen. “We like to fund a company at a time when our investment can make a difference and when the university’s resources can make a difference.”