In Pioneering Venture, Michigan MBA Students Lead Climate Investment Fund


Climate change-related degree programs have been increasingly central to MBA programs in recent years, gaining in importance at leading business schools in the United States and Europe, alongside a rise in growing global awareness of the need for action and the recognition that businesses – and therefore business schools – must play a leading role in solutions to what many see as the most important problem of our time. Some schools, run by professors who study and teach the crisis, are even going beyond the assortment of electives offered since the middle of the last decade, moving towards a ‘climate change core’.

Long before the coronavirus pandemic rose to the forefront of global concerns – sucking all the oxygen out of the room, so to speak – the need to tackle climate change, and the unique position of B schools to do so , had increasingly encouraged grandes écoles to devote major resources to the issue, whether in the form of think tanks and endowed institutes, high-level academic research, the launch of new programs and diplomas, or creating experiential and other additions to MBA programs.

Some schools have been working there longer than others. At the University of Michigan, efforts to harness student brains in the fight against climate change date back to the 1990s with the founding of the Erb Institute, a double-degree program that grants an MBA from the Ross School of Business – long known for its action-based learning – and an MS from the School for Environment and Sustainability (SEAS). Following the success of other ventures such as the Social Venture and International Investment funds of the Zell Lurie Institute, the university has now launched the Michigan Climate Venture, a group that will seek to invest in early stage climate technology companies with the potential to make a real difference. on what Faculty Director Gautam Kaul calls “the most pressing and difficult global societal problem we face”.

“A SIGNATURE EDUCATIONAL EXPERIENCE”

Gautam Kaul. Photo by Ross Michigan

Housed in SEAS, the MCV fund is open to full-time graduate students of Michigan campus schools. This is a key element in leveraging the university’s greatest strength as a repository of interdisciplinary expertise.

The key: students will manage the fund, decide where and when to invest. About 20 people have been accepted into the fund by Michigan Ross’ full-time MBA program, SEAS, and the university’s College of Engineering; They will meet and collaborate throughout the year to research, review and invest in agreements aligned with the fund’s mission to tackle climate degradation, with an initial focus on companies tackling climate challenges. agriculture, mobility and materials in the Great Lakes region. As the fund’s website explains, “MCV invests in early stage, pre-seeded startups through Series A, ClimateTech with potential to decarbonize the economy.

“MCV,” says Kaul, finance professor and Robert G. Rodkey college professor of business administration at Michigan Ross, “seeks to be a distinctive educational experience at a leading public research university: problem-oriented and l action, rigorous and data-driven. driven, multidisciplinary, enhanced by technology, co-created and managed by students. He says the notion of learning by doing, rooted in the school, is in the DNA of the new program.

“You learn by doing and being confronted with the problem, rather than learning in silos and then looking for a problem to solve,” Gautam explains. Poets and Quants. “And it started in college in the 90s. We started MAP, and then we created a bunch of action-oriented funds in Ross. “

Gautam has been closely involved in several of these funds. But MCV, he said, “is just awesome. You can say this is the most fascinating learning experience that I hope we have created.

MORE COMPLEX THAN A TYPICAL VC FUND

One of MCV’s most distinctive features is its ambition to be university-wide. It’s essential to be effective, says Kaul.

“The problem of climate change is inherently very complex,” he says. “So the educational mission is to be action-based, which is the fundamentals, but to be the educational place where everyone – at least in Michigan, if not the world – seeks to seek concrete solutions and rigorous. “

He cites the Social Venture Fund, of which he was the founding CEO when it launched more than 10 years ago, as a model – at least to begin with.

“SVF has raised funds on its own, which shows the success of this educational model,” says Kaul. “I think we will be even more successful in fundraising for this issue because the level of interest is much higher. But we also have to prove that this model works – both the education model and the investment model. And it is fair. The good news is that the elders are supporting us, so these are permanent funds. And it’s not like typical funds, which have been around for 10 years, and you have to make the investment and get out. We can even research if the VC model is the best model.

“That’s what I love about this initiative: it won’t take anything for granted. We can even innovate on the financing side. It’s much more complex than a typical VC model. I’m very confident we’ll be able to replicate what the Social Venture Fund has done – it has raised money from alumni, and we’ve now had a track for about 10 years. I think we’ll get there faster with MCV.

TANGIBLE SKILLS

How did MCV find its inaugural team? It was a very selective process, says Kaul.

“It’s like finding the owners of a start-up business,” Kaul explains. “It happened in a very intimate interview process – it was a two week process, which I hope I never have to relive. I am not joking. They’re already at the University of Michigan, which is a huge, high hurdle. And then the people in the room were pretty rigorous in the selection process. So imagine that you are applying for the MBA program and you have to go through a written application process, an interview for which you had better be prepared with a dossier. And then you are selected among so many others who are also rejected, because a fund cannot be big, it cannot have a hundred people.

Laura Dyer, a second year dual MBA / MS student at the Erb Institute in Michigan, was one of the successful applicants. CPA in the field of investment management, she is now co-director of training at MCV.

“I think one of the main things that excites me about MCV is the opportunity for real action-based learning in this growing field,” said Dyer. P&Q. “One of the main reasons I came to the University of Michigan was action-based learning, like the MAP project and the funds. And there are so many opportunities to do it, but there was nothing specific to the climate at the University of Michigan before. ”

Dyer wants to pursue a career in climate technology venture capital after school, “so this is really the best place to learn from peers, learn with peers, really get involved in the ecosystem, start talking. to startups and being truly able to have tangible skills to bring to future employers.

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