Educational Objectives

As impact investing has emerged as a new, fast-growing category of private investing, so too has the awareness of the stark disparity between access to capital among Black, Latinx and immigrant small business owners who are poorly served by the small business finance sector. The educational objective of the field course is to understand why certain business founders lack access to capital and work to understand whether and how small investments from an HBS Impact Investment Fund of $25,000 to $50,000 might help these businesses grow.

Specifically, the field course will seek to focus on three things:

• To provide hands-on experiential learning in thinking about the financial, commercial and operational diligence of small businesses, as well as to provide hands-on experience with the investment process, from sourcing opportunities, working with founders, negotiating with co-investors, engaging advisors to presenting to an investment committee and moving into the mechanics closing an investment.
• To understand the barriers in access to capital (financial, social and human) that have historically hindered growth in Black, Latinx and immigrant small businesses in the Boston region, and nationally
• To increase familiarity and collaboration between HBS students and businesses (including their customers and employees) in communities in and around Boston that they might not otherwise be familiar with.

Course Content and Organization

The course primarily involves small teams of students (3-5 per team) conducting investment due diligence on local Black, Latinx and immigrant small business owners who are looking for investment to scale their businesses. In partnership with a number of Boston-area networks (e.g. Boston Impact Initiative, Foundation for Business Equity, New Profit, Visible Hands) that are seeking to promote the growth of small businesses, teams of students will be conducting financial, commercial and operational diligence on prospective investments from the HBS Impact Investments Fund. Students will also be providing business advisory support for companies that have already been supported with investment in prior years.

Course Requirements and Grading

The final deliverables will be a due diligence plan to assess the business from a commercial, operational and impact perspective; a final investment memo that summarizes the diligence and recommends an investment (or not); a financial model that is the basis for informing the investment decision; and an impact plan that outlines how the business will deliver impact. The course grade will have the following components:

• Due Diligence Plan: 20%
• Investment Memo (with financial model and impact plan): 40%
• Investment Committee Presentation: 10%
• Class Participation: 30%

Pre-Requisites

None

Cross-Registrants/Auditors

The course is open Kennedy School of Government students enrolled in a joint MBA program.

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