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Student-led Social Venture Fund at Michigan's Ross School of Business Makes First-of-its-Kind Investment in LearnZillion

4/12/2012 --

Student-led fund participates in $2.4 million Series A funding for fast-growing edtech start up.

ANN ARBOR, Mich. — The Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michiganís Stephen M. Ross School of Business today announced its Social Venture Fund has closed its first investment. The Fund joined a syndicate of 17 investors in a Series A round investment totaling $2.4 million in LearnZillion, a web-based platform that gives students, teachers and parents access to a video library of high-quality, standards-based lessons taught by the nationís top teachers. This marks the Social Venture Fundís first investment and the first ever investment made by a socially-oriented, student-led venture fund.

The Social Venture Fundís seeks to make early-stage investments of up to $200,000 in sustainable, innovative, for-profit organizations that deliver financial returns and place the generation of a significant social impact at the heart of their mission. It is managed by Gautam Kaul, professor of finance at the Ross School of Business and by 34 students (29 MBAs and 5 BBAs) who have wide-ranging experience in fields that include technology, investment, and education. Along with the Wolverine Venture Fund and Frankel Commercialization Fund, the Social Venture Fund completes U-Mís trifecta of student-led venture funds, managed by the Zell Lurie Institute, which effectively immerses students in experiencing all aspects of venture capital investing.

"This investment marks an important milestone in the history of the Social Venture Fund," said Seth Greenberg, MBA Ď12, and one of the directors of the Social Venture Fund. "We are not only making our first financial investment, but are also co-investing with well-established impact investors and venture capitalists on the deal to help LearnZillion develop and scale their business. We hope we can act as a model that other business schools can replicate as a way for students to learn first-hand about early stage investing in socially and environmentally responsible companies."

A team of nine students led by Emily Airey, MBA í12, and Daniel Reyes, MBA Ď12, consisting of business and law students, sourced the deal and conducted in-depth due diligence on the company, which proved valuable to several of the dealís investors. As part of the Social Venture Fundís investment in LearnZillion, both parties will work together to ensure socially-minded business metrics are met on an ongoing basis. The company is also participating in the Instituteís Summer Internship program to bring an intern onboard from Ross to work with the company.

"The enthusiasm and thoroughness demonstrated by the students from the Social Venture Fund was impressive," said Eric Westendorf, co-founder of LearnZillion. "They were extremely thorough in their due diligence and both the information and excitement they shared proved extremely valuable in helping to get other investors on board. Their ongoing support will be critical as we try to create positive change in todayís education system."

LearnZillion currently focuses its lessons on grades three through nine with a focus on math. This funding will help the company accelerate content development by bringing on additional staff and developing additional material. Other investors include OíReilly Alpha Tech Ventures, DC Community Ventures, and Learn Capital Venture Partners.

"We charted the course when we introduced the Wolverine Venture Fund as the first student-led fund, and we have blazed the trail yet again by having our Social Venture Fund be the first socially-oriented student-led fund to close a deal," said Tom Kinnear, executive director of the Zell Lurie Institute. "Our funds have performed above average with several successful exits through the years and have provided many students with an unparalleled learning experience. With todayís investment in LearnZillion, we can proudly add social outcomes to the positive benefits generated by this program."

About the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies The Institute and its Center for Venture Capital and Private Equity Finance bring together a potent mix of knowledge, experience and opportunities from the front lines of entrepreneurship and alternative investments. The student learning experience is further enhanced through internships, entrepreneurial clubs and events that serve to provide viable networks and engage the business community. The Schoolís three student-led investment funds, with over $6.5M under management, immerse students in the business assessment and investment process. Founding Board Members include Samuel Zell, Chairman of Equity Group Investments and Eugene Applebaum, Founder of Arbor Drugs, Inc.



For more information, contact:
Mary Nickson, (734) 615-4424, mnickson@umich.edu