Students from MIT Sloan’s new impact investing club won the grand prize at the MBA International Impact Investing Network and Training competition held at the Wharton School at the University of Pennsylvania in April. The MIT Impact Investing Initiative, launched last year, won the competition with its pitch for investment in Destácame, an alternative credit-scoring platform founded by MIT Sloan alumni.
The MBA International Impact Investing Network and Training competition is a six-month experiential learning opportunity that culminates in a pitch contest with 25 participating teams from top universities. The student teams source and conduct due diligence on early-stage startups that can not only generate positive financial returns, but also have strong social or environmental impact.
The competition, a joint venture with the social and impact investing firm Bridges Ventures and the Wharton Social Impact Initiative, featured judges from Bank of America and Merrill Lynch, Goldman Sachs, Blue Haven Initiative, and Golden Seeds, among others.
“It’s as if each school is their own venture capital fund, and they are pitching a company to their investment committee at the competition,” said Limor Bordoley, MBA ’17, a member of MIT Sloan’s team and a vice president for the MIT Impact Investing Initiative, a club commonly known as MI3.
The club is open to all MIT students and now has about 30 active members.
Four things to know about MI3 and the MBA International Impact Investing Network and Training competition:
The club got its start as a part of the MIT Sloan Net Impact chapter.
David Sanchez, MBA ’16, the club’s founding president, was unfamiliar with impact investing until he attended a Net Impact conference in Minneapolis nearly two years ago. He realized that this emerging field was a vehicle to generate both impact and financial returns.
“MIT seemed to be uniquely positioned to lead a conversation on impact investing. As a result, we created an impact investing initiative within Net Impact. It grew so much and generated so much interest that it made sense to engineer a separate club around this topic,” Sanchez said.
The Sustainability Initiative at MIT Sloan advised and financially supported the group, which started to explore the best model to bring impact investing to campus. Competing in the MBA International Impact Investing Network and Training competition was an obvious fit. Nearly 25 students formed a total of five teams for an internal impact investing competition at MIT Sloan, as a way to select the group that would represent MIT at the international competition.
The winning team, which included Bordoley, as well as Riley Clubb, MBA ’17, and Pilar Carvajo, MBA ’17, then presented at the Wharton competition. Two other members, Joelle Owona, MBA ’16, and Sruthi Chintakunta, MBA ’17, were part of the team, but did not attend the event.
The MIT Sloan team considered 25 potential companies in the financial inclusion space before deciding on Destácame.
Destácame, which was started by MIT alumni, is a free credit-scoring platform based in Chile. The service offers customers a chance to enroll online using their utility bill payment records and then a proprietary algorithm developed at MIT provides an objective credit score. Pending an independent review and further due diligence by the Moelis Family Foundation and Liquidnet, the company will receive a $50,000 investment. It is also currently raising a seed funding round.
“In Latin America, those who don’t have access to affordable credit are a significant part of the population. Destácame’s model is very intuitive and can scale quickly. We received some feedback from the competition judges that the economics of our model were appealing in terms of the investment and the return,” Bordoley said.
“This was totally in MIT’s DNA,” Bordoley added. “It’s a company using big data to assess credit and improve the lives of millions.”
The first-place win has given the new club momentum, and its members have lots of ideas.
In the coming year, the club will explore other topics through their speaker events and work with the finance track at MIT Sloan to explore topics such as pricing climate risk, public equities, project finance, and social impact bonds.
“Impact investing is a corner of sustainability, and the competition is sort of a corner of impact investing that focused on early stage investing,” said Clubb, who is co-president.
Members of MI3 are working with faculty to create a course exploring topics at the intersection of finance and sustainability.
The Sustainability Initiative at MIT Sloan, along with members of the finance faculty, convened 12 students, including members of MI3, to explore templates for impact investing that are well-grounded in financial modeling. Through an independent study, these students outlined the proposal for a course that if approved, would be offered in the spring of 2017.