Network of student-led social value funds expands national presence

 

Steve Petterson, Executive Director of the National Social Value Fund (left), and Barend van der Vorm, board member of the Centre for Social Innovation & Impact Investing (SauderS3i) at UBC (right) at the Vancouver Social Value Fund launch event on October 16, 2019.

Posted 2019-12-11
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When UBC Sauder alum Steve Petterson graduated from the Bachelor of Commerce (BCom) program in May 2017, he was frustrated by the lack of opportunities for students and young graduates to gain meaningful experience in impact investing.

With the desire to create a new financial vehicle that would support underserved social enterprises within communities, paired with the idea to create an experiential learning opportunity for young leaders, the National Social Value Fund (NSVF) was born.

Through its non-profit owned structure, the NSVF takes a blended capital approach to provide impact-adjusted financing to social purpose organizations. It has grown into a network of local social value funds spread across the country, with chapters in Montreal, London, Kingston, Calgary and Vancouver.

Though the funds have been working in communities informally for the last two years, several of the locations only officially launched this fall, including the Vancouver Social Value Fund (VSVF), which was inaugurated with a celebratory launch event on October 16.

Steve Petterson

As Executive Director of the NSVF, Steve Petterson supports the social value funds across the country. Much of his day, he says, is dedicated to planning for the future.

 

Young leaders as decision makers

Petterson serves as Executive Director of the national organization, but he isn’t the strategist behind the investing decisions. That important role is left to a group some may consider surprising: university students.

Each local fund is led by a team of eight students from diverse backgrounds and faculties selected from universities within that particular city. Students go out into their community, and seek to understand where there are gaps both within the financing of social enterprises and in social impact support.

“They have capital that comes from a blend of sources, they go through the research, they go through the due diligence, they make the investment decisions,” says Petterson.

 

Student-led from the ‘get-go’

Students in third- and fourth-year university are eligible to participate. They remain in the program for two years, entering at the associate level for their first year, and then running the fund in their final year as a fund manager. Petterson says the teams themselves are self-selected in that the outgoing fund managers who are graduating from university select the incoming cohort of associates.

Gaby Fekete

Gaby Fekete is an associate at VSVF and a UBC Sauder student pursuing a major in accounting with a concentration in sustainability and social impact.

Third-year UBC Sauder BCom student Gaby Fekete played a significant role in founding the Calgary Social Value Fund and is currently an associate with VSVF. She says the weekly meetings for the UBC team include discussions ranging from how to define impact and whether certain forms of impact should be prioritized in Vancouver, to how to develop more creative forms of debt-financing.

“What is considered ‘impactful’ among each member of the team is different and unique to the individual and I think that is very powerful,” says Fekete. “It allows VSVF, as a collective, to maintain an inclusive and open mind to diverse or unconventional forms of change-making.”

 

William Pompeu

VSVF fund manager William Pompeu is a fourth-year UBC Sauder student who plays a large role in sourcing and talking to ventures for the fund.

William Pompeu is a fourth-year BCom student at UBC Sauder and a fund manager at VSVF. Pompeu notes that students involved in these early stages of the funds have a particularly important role, “We are setting precedents that will influence how decisions will be made in the future.”

As for how his involvement in the fund has altered the way he approaches business, Pompeu highlights that impact investing requires you to have a close relationship with stakeholders.

“Profit is a goal but the impact you have on your surroundings is as important, so you must be more aware of how your decisions will impact people,” says Pompeu. “This people-centric approach to business that is inevitably present in our impact investing ecosystem has certainly taught me a new way to look at business and investing in general.”

 

Tailoring the funds to every community

The biggest difference among the various fund locations, Petterson says, is the context they take on.

“Our goal is to build a financial vehicle in all of these communities that is going to fit and fill a need within that community. What the VSVF invests in, where they can create the most impact per dollar is going to be very different than what it would be in Calgary.”

The VSVF, for example, has made five investments so far, totalling approximately $315,000. One of those is an investment into a local group called CleanStart, which hires people with barriers to employment and offers junk removal, cleaning and pest control services.

The VSVF student team provided CleanStart with an impact adjusted loan. They created a funding model where, as certain metrics were hit, the interest payable on the loan would decrease. This offered the financial incentive to create more impact – to hire more people with barriers to employment – and in exchange, the social enterprise would take on less interest payable.

“We want to create a financing vehicle that doesn’t extract from these social enterprises but is allowing them to create and do good work,” says Petterson.

 

National in scale, local in scope

“We want to build out a national in scale, local in scope financial vehicle that brings in blended capital and is able to invest that capital in local communities with each community’s context in mind,” says Petterson.

With the cross-county tour of launch events now over, Petterson is looking forward. He says his vision for five to ten years from now is to have established social value funds in 30 or more communities throughout Canada, both big and small.