“Beating the Odds” at Entrepreneurship@Cornell
Investing in a New Economy
“Beating the Odds: Big Payouts from Unconventional Strategies” was the theme of the Johnson School symposia at Entrepreneurship@Cornell Celebration 2010, a university-wide event held April 15-16, 2010, that brought Cornellian business leaders, faculty, and students together to foster innovative thinking and an entrepreneurial spirit on campus.
With the economy beginning to recover and environmental awareness the highest it has ever been, venture capitalists and investors are increasingly interested in socially oriented businesses that combine profitability with sustainability. William Rosenzweig ’81, co-founder and managing director of Physic Ventures, invests in high-growth, technology-enabled companies that focus on consumer-directed health and sustainable living."People are going further on less," he observed, "and that creates a new, very vibrant business climate."
Rosenzweig was one of four participants in a panel discussion on “Investing in the New Economy: The Changing Landscape and its Funding Models,” which in turn was part of “Beating the Odds: Big Payouts from Unconventional Strategies,” the Johnson School symposia at Entrepreneurship@Cornell Celebration 2010, a university-wide event held April 15-16, 2010, that brought Cornellian business leaders, faculty, and students together to foster innovative thinking and an entrepreneurial spirit on campus. In “Investing in the New Economy,” alumni from varied backgrounds discussed emerging trends in financing for innovative, entrepreneurial companies that address social and environmental needs.
Clean technology is one of the most well-funded areas in this new economy, attracting venture investors who see increasing demand for clean tech as people become more environmentally conscious. Panelist Tom Schryver ’93, MBA ’02, is the CFO of e2e Materials, an Ithaca-based company that is working to commercialize a formaldehyde-free, cost competitive alternative to particleboard. He maintained that "venture investors don't invest in pictures, they invest in movies" – that is, businesses that have a positive social and environmental impact without compromising financial returns are attractive to VCs looking for a trajectory of innovation.
The discussion centered around the need for a fundamental shift to impact investing: actively investing in companies directly involved in change. As a manager of impact investing as RSF Social Finance, Taryn Goodman ’00, MBA ’09, noted that a radical revision of investment strategy is needed, one that focuses on risk management rather than benchmarks. Schryver agreed, adding that investors "should not take models as a proxy for precision."
All of the panelists agreed that people are rethinking what they are trying to achieve with their investments. Self-styled "intrapreneur" Angela Mwanza MBA ’00, a senior vice president at UBS Private Wealth Management who has incorporated a socially responsible investment strategy in clients' portfolios, believes that, given current trends, "people will move towards thinking about impact investing as a daily practice."
From the businessperson's point of view, panelists suggested that thinking about people as consumers is not sustainable in the long run. Mwanza argued that "we have to shift from being a consuming, consumer-based economy to a citizen-based economy" in order to achieve sustained social and environmental improvement. Panelists say this new economy is already emerging, and they urge entrepreneurs to take advantage of it – to "get up on that surfboard just as the wave crests" said Rosenzweig, a Californian, put it. As impact investing grows and venture capital becomes available, there is a window of opportunity in which to make a profit and make a difference.