Universities have long been engines of innovation through research and education. Recently, however, they have embraced a new role as investors, deploying capital to support startups that deliver both environmental and financial returns, i.e, impact investing. Across the United States and abroad, campuses are launching sustainability-oriented initiatives, be that through industry alliances, student-run impact funds, or green-tech accelerators, making higher-education institutions integral to the climate economy. A standout example is the Tarrson Impact Investment Fund at the University of Chicago Booth School of Business. Managed by MBA and public policy students, the fund backs early-stage companies that address pressing environmental challenges alongside other critical social issues.
The Rise of Student-Led Impact Investing in the U.S.: A Brief History
The student-led impact investing movement began in 2009 with the launch of the Social Venture Fund (SVF) at the University of Michigan’s Ross School of Business. It was the first fund of its kind in the United States, enabling MBA and BBA students to manage all aspects of early-stage investments in companies with a focus on social and environmental impact. Over the past decade, SVF has invested in ventures spanning community development, healthcare, education, and climate change mitigation. The fund also developed its impact measurement framework, contributing to the broader field’s evolving standards.
Following Michigan’s lead, other top business schools launched similar programs:
- The University of California, Berkeley has launched several investment funds as part of Haas students’ curriculum. The Sustainable Investment Fund, established in 2008, was the first to offer students hands-on experience in socially responsible investing (SRI) and environmental, social, and governance (ESG) strategies. Later, the Haas Impact Fund was introduced to support early-stage impact startups across sectors such as Climate, Health, Financial Access, and Renewable Energy. In 2024, the Climate Solutions Fund was launched to focus on climate finance, with investments targeting areas like public-private partnerships, capital stack structuring, and growth equity for technology solutions.
- The University of Chicago Booth School of Business started the Tarrson Impact Investment Fund in 2018 to offer catalytic capital for startups with impact in health, environment, and economic issues.
- Yale School of Management launched in 2023 the Meng Impact Investment Fund, providing hands-on training for students interested in using market-based financial tools to drive social and environmental change.
Today, student-led funds operate across dozens of campuses, with networks like MIINT (at Wharton) and CASE i3 (at Duke) helping to standardize learning models and build community. These initiatives not only offer practical training but have helped position universities as key contributors to the rapidly growing impact investing ecosystem and support the momentum of models like student-managed impact funds.
These programs represent more than experiential learning. As Clark and Gonnella (2016) emphasize, preparing students for careers in impact investing requires a blend of financial fluency, cross-sector knowledge, and the ability to match capital structures with social outcomes. Universities are adapting by offering training not just in venture capital, but in diverse investment tools such as catalytic capital.
Booth’s Tarrson Fund: Learning by Doing
At Booth, the Tarrson Impact Investment Fund provides students with practical experience in evaluating and funding mission-driven startups. Supported by philanthropy, the fund focuses on innovations in health, economic opportunity, and increasingly, environmental sustainability.
Examples of the fund’s portfolio companies include:
Kadeya: Reinventing the Beverage Supply Chain
Kadeya, a Chicago-based startup, offers a solution to single-use plastics with its closed-loop beverage vending systems. These autonomous kiosks allow users to check out a sanitized, reusable bottle, drink, and return it. The system manages filling, cleaning, and usage tracking, significantly reducing the environmental impact of bottled beverages. This scalable, tech-enabled approach directly addresses persistent consumer waste.
Founded by Manuela Zoninsein, an experienced sustainability and agritech professional, Kadeya’s systems are deployed in high-demand environments like construction sites, military bases, and factories. Each station occupies only 7.5 square feet, making them suitable for locations with limited access to traditional hydration infrastructure.
Kadeya has received notable recognition for its innovation, including the Responsible Innovation Award at the 2024 Self-Service Innovation Summit and being a finalist in Fast Company’s Innovation by Design Awards. With support from the Tarrson Fund, Kadeya is expanding its reach across industries that require sustainable, cost-effective hydration solutions.
Harvest Thermal: Cutting Carbon at Home
Harvest Thermal, another startup backed by the Tarrson Fund, addresses carbon emissions from residential heating. This California-based company offers a smart thermal battery system that integrates heat pumps, insulated hot water tanks, and intelligent controls. The system optimizes heating for water and living spaces by operating during periods when clean, low-cost electricity from solar and wind sources is abundant. This approach aims to reduce both emissions and energy costs without compromising comfort.
Having secured over $11 million in funding, including a $4 million seed round in 2023, Harvest Thermal is expanding its operations. Partnerships with developers such as KB Home indicate a move towards scalable deployment, especially in states with growing electrification incentives. Through its investment in Harvest Thermal, the Tarrson Fund is supporting technological innovation that contributes to the decarbonization of residential infrastructure.
Beyond Capital: A Collaborative Model
What sets university impact funds apart is their collaborative nature. Students not only invest but also work directly with founders, providing strategic insight, research support, and market analysis. This hands-on partnership enriches the learning experience while helping startups gain traction. This approach emphasizes the fact that meaningful climate impact requires more than money. It demands intellectual capital, trusted networks, and a commitment to systems change.
Conclusion: The New Role of Higher Education
The University of Chicago has long been known for shaping economic theory. With the Tarrson Impact Investment Fund, Booth students are beginning to shape something else: a market where doing good and doing well are the same.
Reader Questions
How can universities scale up student-led impact investing initiatives to drive greater real-world change?