University of Michigan's Social Venture Fund Invests in Court Innovations
Student-led impact investing fund uses proprietary methodology to evaluate investment potential of Michigan-based court dispute resolution company
June 06, 2017 --
ANN ARBOR, Mich., June 6, 2017 /PRNewswire-USNewswire/ -- As part of its mission to support innovative, for-profit companies that place social and environmental impact at the heart of their business models, the student-led Social Venture Fund, housed in the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan's Stephen M. Ross School of Business, announced that it has invested in Court Innovations, an Ann Arbor-based dispute resolution platform. Court Innovations allows courts to handle infractions, disputes and outstanding warrants online, removing a major barrier for people who can't afford the transportation or time off to appear in court in person. The Social Venture Fund contributed $50,000 toward a $1.8 million Series A investment. The Fund participated with four investment funds, private investors and equity crowdfunding. Currently available and launching in 23 court systems, Court Innovations will use the money to bolster its sales and marketing functions in order to expand its footprint past the Midwest to court systems nationwide.
Founded in 2009 and managed by a team of nearly 40 MBA and BBA students, along with faculty advisor Gautam Kaul, the Social Venture Fund is the nation's first student-led impact investing fund. During the last seven years, while evaluating hundreds of for-profit companies in education, health care, food systems, environment and urban revitalization, the Social Venture Fund has come up against the same difficult question that impact investing groups around the country face: How do we reliably evaluate a company's potential value, in addition to its valuation?
Using a proprietary model based on the USAID logic model, along with a social ROI calculation, every startup considered for investment gets a report card score that quantifies the potential for social impact in such a way that it can be weighed against a company's financials to give the students a standard for evaluating a company's potential. When Alex Kravitz, MBA '17, the Social Venture Fund's director of investments, along with the due diligence team headed by Nancy McDermott, MBA '18 and Christine Priori, MBA/MPP '17, began the scoring and due diligence process for Court Innovations, they knew they had a rare opportunity to support a company that rated highly across the board.
A spinout from the University of Michigan Law School, Court Innovations was founded in 2014 by J.J. Prescott, professor of law, and Ben Gubernick, former law student, as they looked for ways to handle the backlog of warrants that exist in the American court system. Every year, as many as 75 million Americans who are cited for minor charges such as unpaid traffic fines are issued warrants and forced to appear in court?presenting major challenges for anyone who can't afford transportation or the time off work to appear in person, not to mention creating an administrative backlog for the court system itself. Matterhorn, Court Innovation's online platform, allows people to submit contextual information about the charge, answer questions and hear back from a decision-maker, all without needing to appear in person. It also frees up court staff time. Before, one district court spent an average of 157 minutes per hearing and took 1-2 months to close a case; with Matterhorn, that time dropped to about 27 minutes per hearing and an average case close time of just under 8 days.
"Too often, ideas that start in the academic world stay there; as a company, Court Innovations is the embodiment of University of Michigan-bred creative problem-solving and passion for making the world a better place," said Prescott. "Millions of people in this country are expected to use courts or public agencies that they can't afford or are too afraid to use. Court Innovations' goal is make justice accessible to everyone, and we're grateful for the Social Venture Fund's support in making that mission a reality."
In addition to funding dollars, the Social Venture Fund will support Court Innovations with time and talent, including giving a member of the Fund a board observer seat and making a team available for consulting projects that would benefit the business. "We have a unique opportunity in working with Court Innovations because they are based here in Ann Arbor," said McDermott. "Thanks to that proximity, my team can spend time immersed in the business and working toward mutual success."
"The due diligence process is in many ways the hallmark of experiential learning," said Ali Raymond, MBA '18, a member of the due diligence team along with Sahar Omrani, MBA '18. "The process required us to dig into a real company's finances, evaluate how the management team works together, quantify the impact and create our own financial models and projections. Working with a company as transparent as Court Innovations was instrumental in our ability to make the decision to invest."
"The students leading the Social Venture Fund embody what experiential learning is all about," said Kaul. "They are not afraid to grapple with big questions that have stumped the broader impact investment community, and are actively working to answer them. This due diligence team has done an exceptional job in both choosing a company with a bright future and in advancing the field of impact investing as a whole."
About the Social Venture Fund
The Social Venture Fund is a leader in university-based impact investing, with several active investments. The Fund's previous investments include Conversa Health, Powerhouse Dynamics, LearnZillion, Mytonomy, Loveland Technologies and Jack and Jake's. To learn more, visit www.umsocialventure.com.
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 an impactful combination of deep-seated knowledge, enriching experiences and strategic opportunities from the front lines of entrepreneurship and alternative investment. Students' learning experiences are further enhanced through internships, entrepreneurial clubs, business competitions and campus-wide events that foster valuable networking and engage the business community. The School's four student-led investment funds, with over $8.5M under management, immerse students in the entrepreneurial business sourcing, assessment and investment process. Founding Zell Lurie advisory board members include Samuel Zell, chairman of Equity Group Investments, and Eugene Applebaum, founder of Arbor Drugs Inc. For more information, visit the Institute's website at www.zli.umich.edu.
About Court Innovations
Based in Ann Arbor, Mich., Court Innovations is a spin out from the University of Michigan Law School. Matterhorn allows courts to handle many high-volume infractions completely online, saving citizens and courts time and money. Rather than limiting judicial or law enforcement discretion, Matterhorn enables decision-makers to resolve cases more efficiently and equitably. Its 24/7 access and education component empowers defendants to work with the court to resolve minor violations informally, and at a convenient time. To learn more, visit www.getmatterhorn.com.
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SOURCE The Zell Lurie Institute
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