Impact Investing for a Greener UVM

This post was written by Peter Seltzer ’19, Andrew Oliveri ’19, Maura Kalil ’19, and Matt Iacobucci ’19

At the beginning of the academic year, Finance professor Dr. Chuck Schnitzlein introduced an opportunity for us all to spearhead the first Sustainable Innovation MBA impact investing project. The goal of the project was to show the University of Vermont Treasurer’s office how to build a short-duration fixed income impact portfolio that meets its fiduciary and financial constraints.

Given these parameters, our challenge was to build a portfolio comprised of socially and environmentally responsible fixed-income investments that would contribute to making a positive global impact in the areas of our choosing. A group of thirteen Sustainable Innovation MBA students* have been working collaboratively to come up with investment criteria to build out this potential portfolio of bonds for consideration. Through working closely with Chuck, the Sustainable and Responsible Investing Advisory Council (SRIAC), and the UVM Treasurer’s Office, we are now positioned to make our recommendations to the investment manager to implement this strategy.

*Andrew Mallory, Andrew Oliveri, Alyssa Schuetz, Alyssa Stankiewicz, Esteban Echeverria-Fernandez, Emily Klein, Keil Corey, Maura Kalil, Matt Iacobucci, Noelle Nyirenda, Peter Seltzer, Ryan Forman, Tor Dworshak (in no particular order — EDITOR)

Coming into The Sustainable Innovation MBA program, many of us were novices to the emerging field of impact investing. To build our knowledge and immerse ourselves in this new subject, we began organizing and attending weekly learning sessions. Our resources have included articles and research tools, but most significantly, the book The Impact Investor by Jed Emerson, a prominent leader in this field. These resources provided the foundation for our impact investing toolkit that has aided us in determining our impact objectives and screening criteria for the project. Next, we had to learn the tools that investors use to search for and make judgments on assets in real-time.

We trained ourselves to use the Bloomberg terminal, a powerful tool for investors in providing access to real-time financial data. Each member of the impact investing team completed the built-in Bloomberg Market Concepts digital learning tutorial, with particular attention focused on fixed income securities to build out our general investing toolkit. While identifying whether each bond under consideration held the financial metrics needed to fulfill the fiduciary obligations required of the portfolio for the University, we also used the ESG terminal function to help objectively measure the non-financial impact that each bond holds. The ESG function provides non-financial Environmental, Social, and Governance metrics for companies and bonds, which proved to be an invaluable tool for our research process.

While the whole impact investing team was expected to have a solid understanding the “impact” side of the equation, a subgroup of the team has been taking additional advanced finance classes with Chuck on fixed income investing and portfolio management to master the “investing” side. There, this subgroup has been learning key concepts to help the whole team take the next steps towards building a portfolio that is financially sound and well up to the University’s investing standards. This diversification within our team allows for an overall focus on portfolio impact, while the more specialized subgroup could also incorporate the principles of a financially successful portfolio that was consistent with the investment policy statement and integrated impacted criteria.

During our early coursework in The Sustainable Innovation MBA, we learned how many companies have been aligning their business models and sustainability initiatives with the United Nations’ Sustainable Development Goals (SDG). Thus, we wanted to incorporate the concept of impact learned through the program’s curriculum to maximize our portfolio’s impact. As a group, we brainstormed SDGs that were not only important to us but those in which we saw the most potential for global impact. From that list, we selected three SDGs that we determined were best aligned with UVM’s mission and brand image: Clean Water & Sanitation, Affordable & Clean Energy, and Gender Equality.

The first SDG we focused on was ensuring the availability and sustainable management of water and sanitation for all. We looked to find issuers who not only decreased their water usage relative to competitors but also considered the ‘usage relative to revenue’, which was found to be a helpful feature of the Bloomberg terminal. Similarly, it was important for us to find issuers who not only were mitigating negative impacts but rather having a positive impact with regard to clean water stewardship efforts. With a number of UVM students intimately connected to Lake Champlain and its surrounding ecosystems, we realize clean water to be a paramount goal of our investment council.

The second SDG we focused on was ensuring access to affordable, reliable, sustainable and modern energy for all. We determined that impact within this goal can be derived from companies producing sources of clean, affordable and renewable energy, as well as companies sourcing their energy from renewable providers. Companies that our investment council considers for investing need to be making investments in clean technology and energy efficiency, or investments in affordable energy storage technology. In addition, a company meets our criteria if they have a large green power purchase agreement, or is in a contract to source a majority of their energy from a clean, renewable energy source.

The third and final SDG we focused on was achieving gender equality and empowering all women and girls. This SDG was particularly important to our group as many of our group members are part of The Sustainable Innovation MBA Women For Change group on campus. The team developed the following three objective criteria that the corporations offering the bonds should meet for portfolio consideration: female representation in senior management (at least 33%), proven efforts to create equal opportunity for female employee advancement, and women in leadership (CEO, Founder, Chair of the Board).

The thirteen of us have learned much through the process of working on this project, and we are grateful for Chuck, SRIAC, and the UVM Treasurer’s Office for the opportunity. This was a completely voluntarily effort outside of the regular class schedule and curriculum of our academic program. We are fortunate to acknowledge that the dedication of time and effort towards this project has rewarded the members of our team with a new degree of fluency in the field of impact investing and perhaps even more rewarding, a feeling of accomplishment for having the potential to make an impact in alignment with the SDGs and UVM.

We look forward to taking the next steps with this project and seeing how the recommendations of our team might be utilized by the University and beyond. As we have with this project, we are excited to continue finding new ways to incorporate our learning from each and every subject we are exposed to here in The Sustainable Innovation MBA program, building out our sustainable innovation toolkit even further as we progress into the new year.

Onward!

From the Lab to the Marketplace: Using Sustainable Innovation MBA Classes to Advance UVM Tech Development

This post was written by Steven Micetic ‘19

From solar power to vitamin D fortification, universities are a fundamental source of innovation that advances humanity’s ability to live healthy, sustainable lives. And yet research funding, though it often translates into exciting, new intellectual property, typically doesn’t result in innovations that make it to market and drive impact.

Many of UVM’s 13 colleges and schools are at the forefront in their respective fields of research. In 2016, UVM received $138m in outside research funding alone. Much of this funding goes to efforts that align with the ethos of the Grossman School’s Sustainable Innovation MBA program: mitigate agricultural runoff, improve the efficiency of renewable energy generation, and advance access to care and treatment of chronic diseases.

It is within this context that The Sustainable Innovation MBA offers a unique opportunity to young professionals seeking to translate innovation into impact. In the initial weeks of our classes, I reached out to Associate Professor and Steven Grossman Endowed Chair in Entrepreneurship Erik Monsen because I wanted to learn more about the technologies under development at UVM. Within days, Erik and I were meeting with Assistant Professor of Civil and Environmental Engineering Dr. Appala Raju Badireddy. Dr. Badireddy and his team are developing a filter technology that can extract elements from wastewater previously thought impossible or cost-prohibitive to extract.

Initial conversations with Dr. Badireddy led to a group of Sustainable Innovation MBA students addressing one of the key questions in the technology’s underlying business model. Integrating this work into the Entrepreneurial Business Model class, the team spent eight weeks evaluating markets for captured phosphorous. Beyond making for a rich classroom experience, our work may have real-world application as Dr. Badireddy takes this work from the university to the marketplace.

As we move into the latter half of the program and acquire new skills through the our courses, the prospect of continuing to support the success of green technologies like Dr. Badireddy’s filter technology is an exciting one. Perhaps the next great green technology may come from the laboratories of UVM, and perhaps its success may be supported by one of my fellow students.

Photo by Louis Reed on Unsplash

Roomies!

Billy Rivellini ’19 and Adam Figueiredo ’19 (we’re not yet sure who’s Oscar and who’s Felix) found they each needed a place to live and a roommate as The Sustainable Innovation MBA school year approached. This is their story.

Billy:

“The pressure was on, it was mid-July and I did not have an apartment yet for the upcoming school year. Do I try to find someone looking for a roommate? Get an apartment then try to find a roommate? Or do I just find a one-bedroom apartment? Where do I try to live? Should I get a pet-friendly apartment so my dog can come up and visit?

“Then, I see that I just received an email in my freshly assigned UVM email with the subject “Burlington Housing Availability” from a fellow Sustainable Innovation MBA classmate, it sounds like a great deal and location, I’m in. After meeting up with Adam and confirming I would be moving in, I am pumped. Not only do I have an apartment, but I already got to meet a classmate.”

Adam:

Sharing an apartment with a classmate has enriched my experience in the program. I’ve gotten more opportunities to socialize with those I care about outside of the classroom. I’ve also benefited from the added layer of accountability.”

Billy:

Four months into the program and I couldn’t be happier to have a classmate as my housemate. We are on the same schedule, know the same people, and have the same workload. I don’t have to worry about a loud or obnoxious housemate who I have to worry about being a distraction when I’m trying to do work or not having a similar interest. We can bounce ideas off of each other, talk about our work and help each other out when one of us is struggling with a subject (or battle through it together).

“Reflecting upon the decision to room with a classmate couldn’t have been a better one, and I would highly recommend incoming students to consider this option and reach out to one another before the year starts. Not only will you be with someone that has similar interests and motivations (you both chose the program for a reason), you also have a sounding board for your thoughts, someone that can help you with a tough subject and be a lifelong connection in the sustainability and/or business world.”

Adam:

We all need a reminder that class starts in 15 minutes sometimes. I highly recommend the institution.”

In The News: Our Class in Entrepreneurial Business Models

“Across the Fence,” a long-running news program on WCAX here in Vermont, recently profiled The Sustainable Innovation MBA program.

The focus was on Professor Erik Monsen’s “Crafting the Entrepreneurial Business Model” course, the highlight of which is a business trade show featuring the students’ ideas for new, disruptive business models.

Getting to Know the Class of 2019: Elissa Eggers

Elissa is a Connecticut native who received her undergraduate degree in Art History and Dance from Washington University in St. Louis. After graduating, Elissa attended the Ailey School in NYC before embarking on her professional dance career. Elissa comes to The Sustainable Innovation MBA from Lululemon where she channeled her natural curiosity and knack for visual storytelling into management and visual merchandising roles. Connect with her on LinkedIn.

Why did you choose to attend The Sustainable Innovation MBA program?

I chose this program for its welcoming, collaborative environment and because I wanted learn the questions to ask and tools to use to make business better. I also love knowing that I will be back out in the world in less than a year, better equipped to make a difference!

What has been your favorite part of the program thus far?

So far my favorite element of the program has been the quality and array of guest speakers. There is an incredible network of sustainability and business professionals around this program, and being able to connect with them has been extremely valuable to all of us.

What are three things someone considering the program should be aware of?

1) This program fosters an intimate and collaborative environment to learn and work in

2) Days fill up quickly and there are numerous opportunities to take advantage of outside of the classroom so you need to prioritize what you are most interested in and curious about

3) This program is situated in an amazing city so no matter how much work you have, make sure to make time to get out of the classroom and explore!

How has The Sustainable Innovation MBA program benefitted you so far?

I feel so fortunate to be surrounded by my amazing cohort everyday. I know the relationships I am building will be lasting and I cannot wait to see what we all get up to after the program.

The Twelve Days of SIMBA*

Okay! Now that finals are over for Module 2, and the Class of 2019 has reached (almost!) the halfway point, it’s time to begin celebrating many things, including the upcoming holidays. Enjoy this lighthearted take on “The Twelve Days of Christmas” by Maggie Robinson ’19.  *Oh — by the way — SIMBA stands for The Sustainable Innovation MBA. We guess we’ll allow it…

On the first day of SIMBA, my professors gave to me, Classmates that become family.

On the second day of SIMBA, my professors gave to me,
2 Vermont Weddings, and Classmates that become family.

On the third day of SIMBA, my professors gave to me,Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the fourth day of SIMBA, my professors gave to me, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the fifth day of SIMBA, my professors gave to me, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the sixth day of SIMBA, my professors gave to me, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the seventh day of SIMBA, my professors gave to me, 7th gen speakers, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the eighth day of SIMBA, my professors gave to me, 8 weeks a module, 7th gen speakers, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the ninth day of SIMBA, my professors gave to me, 9 daily coffees, 8 weeks a module, 7th gen speakers, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the tenth day of SIMBA, my professors gave to me, 10 module teams, 9 daily coffees, 8 weeks a module, 7th gen speakers, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the eleventh day of SIMBA, my professors gave to me, 11 Office references, 10 module teams, 9 daily coffees, 8 weeks a module, 7th gen speakers, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

On the twelfth day of SIMBA, my professors gave to me, 12 rewarding months, 11 Office references, 10 module teams, 9 daily coffees, 8 weeks a module, 7th gen speakers, 6 toolkit workshops, Porter’s 5 Forces, 4 intense modules, Fusco’s 3 part test, 2 Vermont Weddings, and Classmates that become family.

Photo by erin walker on Unsplash

Finding the Program’s Delicate Work-Life Harmony

EDITOR’S NOTE: As we approach the halfway point in the program’s intensive one-year experience, we’re publishing a number of student reflections on how found professional and personal balance over the last few months. This post was written by Tor Dworshak ’19

You can manage extracurriculars while in this program; just be sure you’ve got tact, a willingness to work at odd hours, and a vision of productivity.

While most incoming Sustainable Innovation MBA students were worried about academics or moving to a new city, my biggest concern was whether or not I would have the time for bike races. Maybe my priorities weren’t totally in order, but the drive to ensure that I made time to train and race my bike brought me some success in the program. On the first day of orientation, I had convinced myself I would be too busy to race, and that my focus needed to be on nothing but school. Being a bike racer though, I can be competitive at times, and decided that I would compete with myself to race as many times as I could between August and December. The thing standing in my way was fourteen courses. My only option was to create productivity strategies that forced me to stay far in advance of deadlines and deliverables.

There is no denying that this program keeps even the most astute students incredibly busy for the larger part of their waking hours. Case studies for breakfast, problem sets for lunch, research paper for dinner, and studying for dessert. The workload is predictable though. With some proper planning and forward thinking, assignments can be done far in advance, which offers the ability to take a day off for extracurricular activities.

Have a paper due on October 23? Why not force yourself ahead on it by scheduling a meeting with the teacher on October 2nd, at which point you’ll need to have some outline in progress. Two cases due on Wednesday plus a handful of readings on Thursday?  Forget about sleeping in on Sunday, get through as many of those as possible. Weekdays are busy no matter what, so the more you can lighten the load Monday to Friday, the more you can focus on larger deliverables during the week and get ahead on them. The ultimate goal is to avoid ever doing an assignment the night before it is due. This gives insulation in case something takes longer than expected, or you need a night to yourself. And just like that, you just freed up enough time to enjoy an extracurricular activity of your choosing!

And since I have been counting, I have raced nine times so far since the program started…

Photo by Angel Santos on Unsplash

A Conversation with Our International Students

EDITOR’S NOTE: Four members of our current cohort are international students, coming to the program from around the globe, attracted to the program’s perspective on the role business can play in addressing global challenges. Esteban Echeverria, Noelle Nyirenda, Bhargavi Montravadi, and Alexa Steiner sat down recently to talk about coming to Vermont and settling into the challenges of The Sustainable Innovation MBA program. Their bios (along with the entire Class of 2019) can be found here.

The Sustainable Innovation MBA program has been quite the adventure so far. Between hours of class work, group work, readings, guest speakers, and more, the first few months of the program have challenged and inspired us. For a few of us in the 2019 cohort, the experience leading up to the first day of the orientation was an adventure in itself.

Esteban – Costa Rica

Coming from Costa Rica to this program is one of the best decisions I have ever made. I never thought I was going to encounter such a developed and community-conscious city in Burlington. Its citizens, apart from being some of the nicest people I have known, are very aware of social and environmental issues, as well as politically active and full of insights that will make you think about the status quo. From the community-owned grocery stores, to the amazing Lake Champlain, this city has what it needs to be the best place as the home of The Sustainable Innovation MBA.

“The MBA program itself dives in many of the world challenges we currently face, and most of its solutions lie in empowering entrepreneurial projects in developing countries. I recommend this experience to any international student interested in contributing to the economic growth, as well as the environmental and social prosperity, of their countries. The networking and potential connections you will find at this program will be beneficial to your future projects and endeavors.”

Noelle – Zambia

“Moving to Vermont for the program was not without its challenges, and they included but were not limited to: finding accommodation from another continent, completing a visa application in three weeks and moving two chunky pieces of luggage between four flights. But the most difficult part about the whole move was explaining to friends and family where Vermont was, and what it was (there are still some skeptics who aren’t convinced it is an actual state).

“It was easier to explain the existence of the state to some more than others. For instance my father, being an avid political news reader, was aware that the senator was Bernie Sanders, who was also a candidate for the Democratic nomination for president and that the state has some of the more progressive policies when it came to the environment. He was quite proud that his daughter was going back to engineering school to find a way to solve global warming. Unfortunately, I had to explain that I was actually going to business school for an MBA. He is now rather heartbroken that I am not getting a Ph.D. Here I should note that African parents are always up-selling their children when it comes to education.

“Then there was a friend from high school who said she had heard of Vermont, which was a great relief, until she explained what she meant. “It was mentioned in an episode of Scandal,” said she, “Vermont is in Canada! It’s where scandalous American politicians retire to.”  I was confident enough about Vermont’s membership in the United States of America to correct the former statement, however, I could offer no opinion on the accuracy of the latter.”

Bhargavi – India

“Fortunately, I didn’t have the problem of explaining where Vermont is to my family and friends like Noelle, because I was already living in Vermont. But, when I was moving from Boston, I received  lot of questions on where Vermont was so, I took the easy route and told them that it’s near Boston. So now they must be thinking that Vermont is somewhere in Massachusetts close to Boston.

“I always dreamed of doing an MBA. But whenever I tried to pursue my dream, an enticing job offer drifted me away. After my engineering, a job offer in Infosys and in Boston, it was the job offer at Deloitte. Not sure if I chose the program or the program chose me; I am elated to be in The Sustainable Innovation MBA program and enjoying every moment of it. ‘The amalgamation of my career initiative MBA with my passion of integrating sustainability into the businesses/daily life was a dream come true’- This is a statement from my Statement Of Purpose, a part of the application process. As any middle-class Indian family, mine was delighted and excited that I will be doing MBA in the USA.  Still, I was pretty apprehensive about sitting in an American classroom, but after Module 1, It felt like I knew Kalkin 110* from my previous life.

“My initial thoughts were that the American education system is so different to Indian education system. Yes! They are different, but what brings us together is the quest for knowledge, care for people, and responsibility towards planet. There are odds of living in a different continent – 8,000 miles away from homeland across 2 oceans and keeping fingers crossed, checking Twitter for new immigration policies. But, the global potential for this program, especially its importance in developing countries, makes it appealing to any world citizen.”

Alexa – Canada

“Here are my Top 5 things to know as a Canadian studying in Burlington:

“One. The school helps so much with the process of getting a student visa.

“Two. It’s hard to find a place to live in Burlington — start your search early!

“Three. Be prepared for your American classmates to make fun of your accent and your hockey team.

“Four. Try to tame your politeness — sometimes it’s okay to just talk without raising your hand.

“Five. Everyone in Vermont is friendly and warm — even if you’re far away, it still feels a lot like home.”

Esteban, Noelle, Bhargavi, and Alexa: If you are a prospective international student reading this blog post, please reach out to us. We would love to discuss our experiences so far, what it took to get here and why choosing UVM and The Sustainable Innovation MBA program is a great decision.

Getting to Know the Class of 2019: Torsten Dworshak

Torsten — or, Tor — comes to The Sustainable Innovation MBA with a background in digital marketing and strategic management. While at the University of Rhode Island, Tor was a member of the varsity track and field team. Connect with him on LinkedIn.

Why did you choose to attend The Sustainable Innovation MBA program?

If ever there has been an MBA program designed with disruption and creative destruction in mind, it’s this one. This MBA isn’t a fast track to Wall Street, it’s a fast track to learning how to be a serial industry disruptor.

What has been your favorite element/part of the program so far?

Not a single day goes by when I don’t learn something new.

What are three things someone considering the program should be aware of?

1. This is a fast moving program. Don’t forget to breathe.

2. Always be ready for opportunity.

3. After you remember to breathe, breathe again.

While you are taking time to breathe, make time to reflect. Material comes at you so fast that if you don’t actively make time for reflection, it’ll be difficult to create long lasting takeaways.

How has The Sustainable Innovation MBA benefitted you so far?

We meet a ton of professionals who are incredibly passionate about what they do. The opportunity to learn from their successes and failures is a gift.

Anything else you’d like people to know?

All of the speakers from Ben and Jerry’s bring ice cream with them!

The Cap Raise: Valuation

EDITOR’S NOTE: This article is a collaboration between Cairn Cross of FreshTracks Capital and Diane Abruzzini ’17 of VENTURE.co Holdings, Inc. It is one of a series we will be publishing concurrently with FreshTracks Capital.  Cairn Cross co-founded FreshTracks in 2000, and has worked as Managing Partner of the firm since that time. Notable FreshTracks VC investments include SunCommon, Mamava, and Eating Well. Cairn has helped to build a true Vermont entrepreneurial ecosystem by hosting pitch events, accelerator programs, workshops, and teaching at multiple Vermont universities and colleges. He is a former co-chair of The Sustainable Innovation MBA Advisory Board.  Diane Abruzzini has built her career as a food and agriculture entrepreneur and business consultant. She was a student of Cairn Cross during her time at UVM’s Sustainable Innovation MBA program. After completing her degree, she spent time working for FreshTracks partners as an analyst. She currently works in marketing and communications at VENTURE.co Holdings Inc, who’s wholly owned subsidiary VENTURE.co Brokerage Services LLC is a FINRA-licensed broker-dealer.

The valuation process can be murky for both entrepreneurs and investors. Private company stock is typically a “Level III” asset under ASC Topic 820 and its value “cannot be determined by using observable inputs of measures such as market prices or models.” Fair value is estimated rather than observed through readily observable market prices.

Entrepreneurs and investors often disagree on the valuation approach that should be used in a particular transaction. Should one base a private company’s valuation on the comparable metrics for publicly traded companies operating in the same industries, or should one base valuation on the estimated present value of a projected stream of cash flow? If you use public market comparables, which metric is most important to valuation? Revenue? EBITDA? Users? Growth Rate? If estimating the net present value of a stream of cash flow, which discount rate do you choose and are you being too aggressive or conservative in cash flow estimates? Do you arbitrarily choose the mid-growth position? Every entrepreneur, venture capitalist (VC), broker-dealer (BD), and investment bank will use a variety of criteria in order to determine valuation. None of the approaches are perfect–there is no secret sauce–but there are important differences to how VCs and BDs tackle company valuations.

First, we must consider to whom VCs and BDs have responsibilities. VCs are trying to create strong investment returns for the Limited Partners (LPs) who are the investors in the VC fund. Valuation and other terms such as dividends will be negotiated to give the venture investors an investment return commensurate with perceived risk. Before making an investment, VCs rely on the business plan and financial projections supported by company documentation as well as prior investment experience among the VC partners and external due diligence efforts to determine a reasonable company valuation. Continue reading “The Cap Raise: Valuation”