This local economics professor wandered into impact investing and brought his class with him - Generocity Philly

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Dec. 28, 2015 12:30 pm

This local economics professor wandered into impact investing and brought his class with him

Today, Shannon Mudd sits on the executive committee at Investors' Circle Philadelphia. Four years ago, the economics professor didn't know the impact investing network existed.

Economics homework is such a bore when it doesn't involve deploying real capital.

(Photo by Flickr user Jason Rogers, used under a Creative Commons license)

Hearing the words “economics homework” typically activates three human defense mechanisms.

First, the eyes glaze over to bar all external stimuli. Then, all cognitive functions undergo a forced reboot. Finally, any residual capacity for thought recedes to the furthest reaches of the subconscious.

That’s an unfamiliar instinct for the 12 students who enter Haverford College’s annual impact investing course, which is part of the school’s Microfinance and Impact Investing Initiative (MI3). To them, “economics homework” means deciding how to deploy $50,000 of venture capital for maximum social impact.

That amount may be chump change to angel investors of the garden variety, but it’s a celebrated addition to most impact investing funds like the Philadelphia chapter of Investors’ Circle. Students in MI3 invest their capital annually through MI3’s membership in the local group under the guidance of IC Philly executive committee member, MI3 director and professor Shannon Mudd.

In 2011, Mudd wasn’t even aware of IC’s existence. He was a visiting economics professor at Haverford — the new guy, fresh off a six-year run  teaching at Ursinus College. Mudd liked Haverford, and he wanted to stay.

An opportunity to do so presented itself when he caught wind of a rumor floating around campus: Andy Pleatman, an alum supporting the Grameen Foundation in Washington, D.C. was interested in supporting microfinance programming at Haverford. 

Mudd approached the provost, Linda Bell, who confirmed the rumor and shared her idea to use to funds to secure month-long marquee residencies in the department. Mudd wasn’t quite satisfied, so he drew up an alternative proposal: Get students involved in real-world consulting work via the microfinance class.

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“They liked it, so they invited me to stay,” said Mudd. “But they added to the job description something about engaging students in sustainable and socially responsible investing. They left it up to me to figure out what that would be.”

Research eventually yielded results when Mudd said he “stumbled upon” impact investing.

“It seemed like it fit very well in terms of getting involved in private equity investing and using business to accomplish something more than just profit,” he said. “My thought always was that it would be very beneficial to the students to have a practical component of that.”

That “practical component” would be investing real venture money, so Mudd began looking into co-investing opportunities with existing funds. But first, he needed approval from Pleatman.

“He about had a heart attack,” Mudd laughed. “It’s very high risk. It’s not something they’d done with their foundation money at all. But he recognized the educational opportunity there.”

So, Pleatman gave Mudd his blessing. In 2013, MI3 joined IC Philly; Mudd began serving on the group’s executive committee in 2014. There, he’s tasked with directing MI3’s annual $50,000 commitment.

That means once a month, students in MI3 tag along to meetings, where they sit in on pitches from social entrepreneurs. Students get firsthand experience learning the ins and outs of impact investing throughout the year.

As the year comes to a close, Mudd and his flock of fledgling impact investors select three companies actively raising funds. They split into three teams, do their due diligence and present their analysis to an advisory board comprised of investors and Haverford professors.

Then they finish their economics homework by investing $50,000. Sure beats rummaging the beaten pages of a used college textbook.

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