Cultivating civic engagement can help advocacy organizations, nonprofits and cause-based movements drive positive change in the world, but oftentimes, it can be difficult to make sure that the voices of people and communities are being heard by decision-makers.
Recognizing this challenge, as well as an opportunity to contribute to a solution, the Tuck Social Venture Fund (TSVF) has taken a $25,000 equity stake in New/Mode, a technology startup designed to empower people and communities to ensure public institutions meet their needs. In making their investment, the TSVF team co-invested in a $1.5 million round alongside prominent impact investors including Luminate (founded by The Omidyar Group), New Media Ventures, Higher Ground Labs, and Rhiza Capital.
“We felt that New/Mode was telling a very compelling story of amplifying all voices that exist within a democratic ecosystem,” said Mo Earley T’20, a TSVF director. “After our initial conversation with New/Mode’s founders about their vision and business model, we came away impressed with the way they were able to build a powerful organization that is informed by their extensive campaign experience.”
This year’s team of six second-year Tuck MBA students felt that New/Mode was a great addition to the fund, which so far has invested in an education technology platform, a clean energy company and a financial technology startup. TSVF makes investments in early-stage companies that have a measurable social or environmental impact while returning market-rate returns to investors.
“For us, impact is not just about the narrative but about the actual outcomes and metrics that a company tracks to make sure that the alleged impact is realized,” director Melina Sánchez Montañés said. “And in the years that New/Mode has been around, they have had success stories that prove that their business model directly leads to the impact they are trying to achieve.”
Alongside Earley and Sánchez Montañés, the other T’20 fund directors are Adam Lebovitz, Gavin Loudfoot, Jenna Pugrant and Nina Scheepers. The team’s array of experience across multiple industries was helpful in sourcing deals and doing the necessary due diligence.
“Having a diverse mix of students with various backgrounds in terms of impact, investing and entrepreneurial experience was very helpful and added strength to the overall team,” Sánchez Montañés said.
For many students at Tuck, getting the chance to serve as a director of a fund is a unique experiential learning opportunity, given the real-world experience that is gained. In their time as directors, the TSVF team worked closely with the lead investors and the TSVF advisors for the diligence process, which included several video calls with New/Mode’s founders.
“That is something that stood out about New/Mode,” Earley said. “Their level of thoughtfulness in engaging with us drove home their approach to customer support and success. If they were willing to talk with us at that level of detail, it made it easier to believe that’s how they treat their customers and clients as well, which was essential to the success of their business model.”
Steve Anderson, co-founder and CEO of New/Mode, said, "We set out to find values-aligned partners that could help us reach new communities and provide leading cause-based organizations with even more powerful civic engagement tools. From the first conversation with TSVF, we knew they would be an ideal partner with their unique approach to study-led social impact investing. We're thrilled to have TSVF on our team."
In 2017, TSVF made its first investment with a $25,000 convertible note investment in Education Modified, a Boston-based education technology platform. The following year, the fund took a $25,000 equity stake in clean energy company Brightfield Transportation Solutions. And then last year, the fund invested in CollegeBacker, a Silicon Valley startup that aims to offset the financial burden of higher education by helping families create 529 college savings plans.
More and more business schools like Tuck are creating their own funds that focus on environmental and social outcomes, providing an encouraging outlook for the future of impact investing. “The hope is that we can co-invest with other student funds in the future,” said Sánchez Montañés.
The Tuck Social Venture Fund is overseen by the Center for Business, Government & Society and the Center for Entrepreneurship. The fund’s advisers who work closely with the students include John McKinley, executive director of the Center for Business, Government & Society; Curt Welling D’71, T’77, Clinical Professor of Business; and Daniella Reichstetter T’07, Executive Director of the Center for Entrepreneurship and Adjunct Professor.