HBS 1436. Investing for Impact

In 2006, Nancy Pfund of DBL Ventures, a pioneer in investing for impact, invested in an unknown electric car company called Tesla, under the joint hypothesis that the firm would be the next big thing while making the world a better place. After a successful 2010 IPO, Tesla has now surpassed GM as the most valuable U.S auto maker by market capitalization. 

In 2016, the TPG Group, with over $74 billion assets under management announced their latest fund" a $2 billion growth equity fund that will seek outsized financial returns through a new strategy - investing in opportunities that intentionally create positive impact" education, healthcare, affordable housing.

These are just two examples of the way in which the practice of investment is changing. A rapidly growing share of assets around the globe are making investment choices targeting not just return, but also sustainability, values-alignment or impact. This so-called sustainable investing market has grown almost 25% since 2014, and now represents $23 trillion in assets globally, including over 25% of all professionally managed assets.  Many large asset managers (e.g., Goldman Sachs, Bain Capital, TPG, Blackrock, State Street) are establishing impact investment practices and products to meet the demands of capital owners, including pension funds, endowments, and family offices. The promise of “doing well by doing good” is seductive and has garnered significant attention by mainstream media, government, and financial institutions. Many have made bold claims about the potential for investment to solve global problems, while earning returns that are competitive or better. Skeptics argue a focus on social impact may distract from and reduce returns, or even shift funding away from worthy philanthropic causes. This course examines these questions in detail: What return profiles are realistic? Does impact investing actually create social value? How is and how should social value be defined and measured? What does it mean in practice to be an impact investor?

This course provides comprehensive coverage of the $23 trillion investing for impact market: from negative screens and activist investing in public markets in North America and Europe, to venture capital in Asia and Africa and private equity in the US education market, as well as instruments involving the public sector, such as social impact bonds.

Cases critically examine the logical and market case for a wide range of models, ranging from those that seek (and obtain) above market returns, to those designed to use the power of financial contracting to unlock innovation and help transform and scale the social sector.  Cases will require rigorous financial and investment analysis, however, an extensive financial background is not required. Valuation, pricing and structuring fundamentals will be reviewed in class.

The landscape is changing quickly; nearly every case was written or updated for this course in the past twelve months; most classes will feature protagonists as guests.  The course will be jointly taught by Shawn Cole, Professor in the Finance Faculty and Vikram Gandhi, Senior Lecturer and a practitioner in investment banking and impact investing.

Career Focus

This course is geared to students interested in working in the investment industry - whether directly, as an asset manager/investor, advisor or private individual; or indirectly as an entrepreneur or operator receiving investment capital.

This course will be differentiated from other excellent offerings at HBS by focusing on the intersection of investing/finance and impact. Emphasis will be placed on the analytical tools needed to understand the financial perspective and make investing decisions; however, students will also be required to assess investments in the context of impact objectives.  Investing for Impact is a finance course, which could be taken on a stand-alone basis or as a complement to Private Equity Finance, VC/PE, and Entrepreneurial Finance.

Course Content and Objectives

The first module provides an overview of the industry, an introduction to key challenges, and the existing evidence base. We then take the perspective of the impact investor seeking to make smart investments in the context of achieving both financial and impact objectives" including deal assessment and diligence, deal execution, impact management, capital structure, governance and risk management. Third, we study how to succeed in building competitive and high-impact business practices in this emerging field. We end by investigating the next frontier of investing for impact models.


Shawn A. Cole
Vikram S. Gandhi






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  • [Course titles in brackets] indicate that the course is not scheduled to be taught during the 2017-2018 academic year, but may be offered in an alternate year.
  • An asterisk (*) before a course number indicates that a student must obtain the instructor's permission in order to enroll in the course.

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