Michael Chu

Senior Lecturer of Business Administration

Michael Chu's research and teaching at HBS focuses on buinesses serving low-income populations in both emerging markets and developed nations. He is also Managing Director and co-founder of IGNIA, a venture capital firm in Mexico investing in disruptive enterprises providing goods and services to the emerging middle class.

Michael Chu was appointed a Senior Lecturer in the Social Enterprise Initiative of the General Management Group of the Harvard Business School in July 2003. He is also Managing Director of the IGNIA Fund, a venture capital firm in Mexico dedicated to investing in disruptive enterprises delivering high impact goods and services to low-income populations, which he co-founded in 2007. He continues to serve as Senior Advisor to Grupo Pegasus, a private equity firm headquartered in Buenos Aires, which he co-founded in 2000.

Chu teaches the second year elective Business at the Base of the Pyramid, a course introduced jointly with Professor V. Kasturi Rangan. He is Faculty Co-Chair of two Executive Education programs, Strategic Leadership for Inclusive Finance and Business Innovations in Global Healthcare. In the past, he has taught the course Investing and Managing in Emerging Markets, and Effective Leadership of Social Enterprises. In his academic research and teaching as well as a practitioner, for the last two decades Michael Chu has focused on business delivering goods and services to low income segments, with a particular interest in the use of commercial platforms as a response to social issues and public responsibiities.

Before Pegasus, as President & CEO of ACCION International, Chu participated in the founding and governance of several regulated microfinance banks throughout Latin America, including Banco Solidario, which under his chairmanship has been the most profitable bank in Bolivia, Mibanco in Peru and Compartamos Banco, which following its IPO in the Mexican Stock Exchange in 2007 has been incorporated into that exchange's index.

From 1989 to 1993, as an executive and limited partner in the New York office of Kohlberg Kravis Roberts & Co, Chu was one of sixteen professionals deploying KKR’s $5.7 billion private equity fund and managing an investment portfolio with aggregate annual revenues in excess of $60 billion. He joined the private equity firm from PACE Industries, a KKR-sponsored leveraged buyout, where he served as Senior Vice President & CFO, and listed by Forbes as one of the twenty largest private companies in the United States. Previously, he held senior management positions in U.S. corporations and was a management consultant with the Boston Consulting Group. Chu currently serves on the boards of Arcos Dorados (NYSE-ARCO), Sealed Air Corporation (NYSE-SEE), on the Economic Advisory Board of the International Finance Corporation (The World Bank Group), the Advisory Board of Takeoff Technologies, Inc and is a Trustee Emeritus of Dartmouth College.

Chu graduated with an A.B.(Honors) from Dartmouth College and received a M.B.A. with highest distinction (Baker Scholar) from Harvard Business School.

Chu was born in Kunming, China and grew up in Montevideo, Uruguay. He and his wife Victoria Cowling Chu reside in West Newton, MA.

  1. Overview

    by Michael Chu

    Chu's research is focused on business and low income sectors, particularly in the use of commercial platforms to deliver what has traditionally been considered public responsibilities. In the last three decades, business models have emerged to meet the severely underserved needs of the lowest 3 income quintiles of the world, often comprising the lowest 7 income deciles of emerging markets. This encompasses impact investing: the application of investment practices to deliver interventions of high social impact while seeking to provide financial returns to the providers of capital. Chu is interested in identifying the key factors behind the success (and failure) of business models focused on low-income sectors and the conditions under which they create (or destroy) financial returns and social value, and in the relationship between the two.

    Keywords: impact investing; Microfinance; base of the pyramid; role of profit and social impact; private sector development; emerging markets; Business Ventures; Health Care and Treatment; Management; Social Enterprise; Strategy; Financial Services Industry; Banking Industry; Health Industry; Latin America; North and Central America; Asia; Africa;

  2. Business and Low Income Sectors: The Creation of Economic and Social Value

    by Michael Chu

    In the last three decades, innovative commercial solutions have emerged in developing nations focusing on providing effective responses to the hugely underserved needs of low-income populations, both as consumers as well as active participants in productive value chains. Succesful ones have demonstrated the capacity of yielding economic returns equal or superior to those of conventional businesses. Some, such as microfinance, have accomplished this while generating high social value. The implications on global poverty and economic development are significant. The possibility of deploying social impact activities through business models makes it possible to achieve simultaneously and consistently four key characteristics: scale, permanence, continuous efficacy and continuous efficiency. These are the attributes required for meaningful systemic change, implicit in responding effectively to poverty, which can be defined as the exclusion from those goods & services that determine an individual's life-chances. These four characteristics can only be guaranteed through time by commercial industries, operating under intense competition in open markets. In developing countries, where the public sector is particularly challenged as a direct dispenser of goods and services, including in healthcare and education, this affords the private sector a unique role. The analysis of concrete business cases serving low income sectors allows the identification of the key elements of success, the similarities or differences with conventional business practices, the challenges these pose to different types of enterprises, and an understanding (often counterintuitive) of how market mechanisms create or destroy social value.
  3. Impact Investing

    by Michael Chu

    In the last decade, inspired by the success of commercial microfinance, the concept of applying the practice of equity investing to the delivery of high social impact interventions has drawn increasing attention in development circles, business academia and practitioners. In the field, impact investing funds have been raised and are being deployed, pioneering what may become a new industry, or at least a new niche in the area of risk capital investment. As is characteristic of early stages, the current definition of impact investing is as varied as the types of providers and the deployers of capital. While positive social impact is a common objective, the definition of financial success stretches from a nominal return of capital to superior commercial returns. The field calls for the formulation of analytical frameworks to better understand the various approaches, the relevant metrics for the social returns resulting from the deployment of capital, and the link between social impact and profitability.