Case Detail

Case Summary

Good Capital and Better World Books (B): A Better World for Investing

Case Number: 5-310-508(B), Year Published: 2010

HBS Number: KEL527

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Authors: Jamie Jones; Wes Selke; Jennifer Yee

Key Concepts

Impact Investing, Socially Responsible Investing, Social Venture Capital, Social Finance, Assessing Investments, Investment Strategy

Abstract

The purpose of this case is to introduce the topic of socially responsible investing from both the investor and investee perspective. The students will walk away with an understanding of: 1) how to evaluate a portfolio company on a social/environmental mission as well as on traditional financial criteria and 2) what considerations should be top of mind for a social venture considering accepting an equity investment.

Wes Selke is a portfolio manager at Good Capital, an investment fund created to increase the flow of capital to innovative non- and for-profit social ventures that are using market-based solutions to solve problems of poverty, illiteracy, and inequality. In 2007, Good Capital is ready to make its first growth equity investment in a for-profit social enterprise and Selke is considering Better World Books as the firm’s primary target.

Selke must evaluate whether or not the firm is a financially sound investment, and if its social and environmental mission can be preserved upon a liquidation event. If Good Capital proceeds with the investment, Selke must also rework some of Better World Books’ current procedures, which includes fine-tuning the philanthropic giving strategy that is the main component of its social mission.

Learning Objectives

  • To expose students to both the investor and investee perspectives in social venture capital (SVC) deal ensuring they understand the criteria that must be considered when evaluating a potential investment in a for-profit social enterprise (investor perspective) and know what questions to ask both the investor and your organization before accepting an equity investment (investee perspective).
  • To emphasize the importance of structuring a deal so that the social/environmental mission of a portfolio company is preserved upon exit. 
     

Number of Pages: 3

Extended Case Information

Teaching Areas: Entrepreneurship, Finance, Non Profit

Teaching Note Available: Yes

Geographic: California, Indiana and Georgia, United States

Industry: Private Sector

Organization Name: Good Capital and Better World Books

Organization Department: Investment Management

Organization Size: Small

Decision Maker Position: Investment Manager

Decision Maker Gender: Mael

Year of Case: 2007