The deal sourcing team’s objective is to assist Loyal with deal sourcing from the INSEAD community, assess companies to make investment recommendations, and determine the potential impact of each company.
Explore Training SessionsPlease use this form to submit a memo for each company and include your recommendation. As a reminder the recommendation can be: Strong Yes, Weak Yes, Weak No, Strong No.
Thank you for taking the time to help Loyal vet and decide on deals. Review some of the investments ISIF has helped us make below!
Each month Loyal will help ISIF find deals but the DS team is encouraged to source as well. At the end of the month, Loyal team members will join ISIF for the IC where 3 deals will be presented.
See the timeline to better understand the process.
VP of Deal Sourcing (DS) and VP of Impact Assessment (IA) receive deals from Loyal ad hoc.
VPs of DS & IA decide which deals to accept and review – must have one INSEAD alum founder who works full-time and real social impact. Please review red and green flags when deciding.
VP of DS finds 1-2 team members for each deal and VP of IA finds 1-2 team members for each deal
Team members meet with potential investees, put together an investment memo and slides. Please submit the memo above.
Deals are shared with Loyal via Investment Committee (IC) meetings each month, vote decides which companies will receive Loyal’s initial $10,000 investment.
VP of DS shares voting results and Loyal moves the deals forward.
Important to note:
It is very tempting in VC and PE to judge companies on a bar of absolute progress, where you pick the company that is furthest along / seems most likely to succeed. (That is also rational for funds with twenty or so investments, who often cannot afford the career risk of all twenty companies failing.)
This is a mistake for funds like Loyal, which make hundreds of investments, and hence can focus on getting the highest average multiples on money.
In purely profit-focused funds, you cannot decide if an investment is good or not without knowing its valuation. For Loyal, always consider relative progress vs. valuation, not absolute progress:
a) you can 50x your money by investing in a $20M company that has a $1B exit, or 250x it by investing in a $1M company that has a $250M exit.
b) alternatively, a $20M company with a 2% chance of a $1B exit has expected value $20M; a $1M company with a 0.5% chance of a $1B exit has expected value $5M.
In these two examples the company with a four times lower exit / probability of success, is actually five times more profitable to invest in.
Of course, it is very difficult to calculate actual probabilities of success given that the future is unknown. And the principle stands that you should expect much more from a $20M company than a $1M company. At times the $1M company, with less progress and a smaller market, may be a far better investment (for a prolific, patient, 'Moneyball' type investor, like Loyal VC).
In this portion of the program, you'll learn to build a successful fund by mastering portfolio strategy, understanding VC economics, and conducting thorough due diligence. Topics include balancing asset allocation, crafting investment themes, and gaining an edge in investing; navigating fund-building, team compensation, and LP fundraising; and exploring deal terms and global investment considerations. Enhance your expertise in fund management and decision-making with actionable insights and strategies.
In this section of the training program, you'll explore fund operations, covering key areas like managing and governing funds, back office functions, deal sourcing and screening, follow-on funding strategies, and valuation and exit strategies. Gain essential skills and insights to navigate the complexities of fund management effectively.
The following list of companies represents a direct outcome of our strategic partnership with ISIF. Any company listed with traction or growth means they have progressed beyond the initial stage of funding due to their exceptional performance and potential. These investment showcase the effectiveness of our collaborative efforts with ISIF to identify, nurture, and support high-potential startups and ventures.
The INSEAD Student Impact Investing Club has partnered with Loyal VC, a fund run by INSEAD alumni that invests in INSEAD alumni, to give students experience with each of the elements of running an impact investment fund. The following Q&A give more information about each of the activities of the club.
Students need to sign Loyal’s one-page advisor contract.
The INSEAD student impact investing club provides INSEAD students with hands-on real-life investment experience. It partners with Loyal VC and supports it across five key areas: Deal Sourcing, Due Diligence, Impact Assessment, Portfolio Management, and Fundraising. More information is available on the club's website.
Loyal VC wants to give back to INSEAD due to its significant INSEAD affiliations and to strengthen its reputation within the alumni community, which helps attract top INSEAD deals in the future.
The club was created to enhance student learning about impact investing and deploy capital towards impact businesses. Its mission is to provide a real-life learning experience for students to invest for good in early-stage social and environmental enterprises.
The club was founded by Chris Holcroft, Borja Menendez, and Charles Cochin, who are INSEAD MBA 20Ds.
Loyal VC has a partnership with the Club, allowing students to gain real impact investing experience through active contributions to the fund’s operations.
The contract includes a confidentiality agreement where students agree to keep private company information confidential. Signing the contract also provides a chance to share in future upside from the companies.
No, students are not paid beyond the potential future upside, as outlined in Loyal’s advisor FAQ. Compensation, if any, is uncertain and likely years in the future.
The faculty advisors include Vikas Aggarwal, Lucie Tepla, and Jasjit Singh. As of November 2020, Idgar Van Kippersluis (Entrepreneur in Residence and INSEAD fellow) was also an external advisor.
At the beginning of each intake, there will be a presentation and Q&A with club leadership during the club fair for new INSEAD MBAs. Students then submit applications, which are reviewed by the Leadership team to appoint new club members.
The team handles inbound and outbound deal sourcing of INSEAD founder deals, which make up ~40% of Loyal’s pipeline. Activities include contacting and interviewing founders, assessing their businesses, summarizing findings into an investment memo, and presenting the deal at a monthly Investment Committee. Teams of 2-3 students work on screening due diligence for 3 weeks.
Companies must have an INSEAD alumnus who owns at least 10% of the company’s equity and has worked full-time in the business for at least three months.
Loyal VC prefers companies where the alumnus works full-time. If they don't see the company as valuable enough to work in full-time, Loyal is unlikely to invest.
Loyal will make a ‘stage 1’ investment. To understand Loyal’s investment stages and why companies are interested, refer to the Loyal VC Entrepreneur Introduction.
On a monthly basis (usually the 3rd Thursday), the Deal Sourcing and Impact Assessment teams present pitches and recommendations to the Investment Committee. The Committee decides whether to invest, but Loyal VC has the final decision. The VP of deal sourcing manages the IC meeting and ensures all materials are sent in advance.
The process involves sending an Entrepreneur Introduction to the company, evaluating the deal, making a verbal offer, sending Data and Mentoring and Investment Agreements, sharing an Onboarding FAQ, and setting up an onboarding call. The company has two months to issue paperwork for shares/notes.
The IC consists of 3 INSEAD students (Club President and 2 VPs), 2 faculty members (Vikas Aggarwal and Lucie Tepla), 1 external advisor (Idgar Van Kippersluis), and 1 Loyal partner.
Loyal typically invests in an average of two INSEAD deals per month, so zero to three deals may be selected at each IC meeting.
Loyal will make an offer to fund the top company selected in each IC meeting. Additional funding decisions are at Loyal’s discretion.
Students presenting or part of deal teams being reviewed must attend. IC members must attend. Other club members who have signed the advisor contract NDA can audit the call as silent participants.
Yes, Loyal can invest in companies rejected by the IC if deemed fit for investment. Such investments will be clearly stated as Loyal’s decision, not the club’s.
The process involves identifying a potential INSEAD deal, deciding on its impact within 48 hours, contacting the company for materials, reviewing them, interviewing the CEO, preparing an investment memorandum, and presenting it at the Investment Committee for funding decisions.
Yes, either party can end the relationship at any time. This is a goodwill relationship, not legally enforceable. Both parties are expected to extend the relationship until the end of the INSEAD term following the notice.
The Club can work with other funds, though it is good form to discuss this with Loyal.
Activities include selecting a company from Loyal’s portfolio, creating a due diligence question list, organizing calls, drafting a memo analyzing financial, impact, market, and product areas, reviewing with faculty sponsors, deciding on investment, and organizing an Investment Committee meeting to pitch the investment.
Companies are selected from a list provided by Loyal (Spencer) considering additional investments, all with an impact angle.
Typically, one company per period is diligenced. The process is very in-depth.
Two members are assigned to each workstream (financial, impact, product, market) and switch workstreams each period to develop additional skills. The VP oversees all workstreams and assists, usually taking on the most challenging workstream (financial) for the first due diligence.
The main deliverable is the Investment Committee memo for Loyal. A financial model for internal use is also required but not presented to Loyal. Templates are usually provided by the club or can be obtained from the leadership team.
The due diligence team attends the final presentation. The memo is sent ahead, and the meeting focuses on the thought process behind the investment decision, with each workstream presenting their rationale. The Loyal investment committee asks questions throughout.
The final presentation process involves Loyal considering the feedback for their investment process. The investment decision is based on this feedback and the overall analysis presented.
[To discuss]
Expect around 5 hours per week or 30-40 hours per period, with time commitment fluctuating.
Contact the VP immediately and ensure another team member is prepared to take over your workstream.
Loyal aims for a net neutral relationship with the Club. While students invest many hours, most work is learning, with modest immediate value for Loyal. Exceptional student contributions may be recognized through advisor upside.
The portfolio management activity was not well defined in the initial trial.
Students can observe an entrepreneurial company’s development, learn how a VC supports them, and potentially build a relationship with a startup CEO.
Yes, from an approved list. The company CEO also needs to approve.
Portfolio management is an ongoing activity. Loyal recommends each student make a 3-4 month commitment to shadow and work with one company, joining Loyal’s monthly calls with the company. Opportunities to contribute further will arise naturally in these calls.
A Loyal partner or venture partner has a call with each portfolio company every month. This may require a half-hour break from other activities once a month.
Your feedback and opinion on the company will be used as part of Loyal’s monthly evaluation for follow-on investments. You may also have opportunities to work directly with the company.
This depends on you and the company. Loyal asks the CEO monthly how the team can help. You can volunteer for tasks where you can add value. An entrepreneurial spirit is key to making the most of this activity.
You can set your own limits. Loyal generally expects 1-3 hours per project, with a maximum of 10 hours per month.
The agreement currently supports 30 MBA students actively working with Loyal across the five workstreams.
The team conducts impact assessments at deal sourcing, due diligence, and portfolio management stages: 1) Deal Sourcing: Qualitative impact assessment of companies; 2) Due Diligence: Qualitative impact assessment and presentation of findings; 3) Portfolio Management: Apply impact accounting framework to assess company impact.
There is no single accepted standard. The Club uses a variation of the Impact Management Project framework’s 5 Dimensions of Impact and has developed a simplified version for quicker assessments.
Estimating dollar values for impact is currently impractical and considered a long-term goal. Loyal believes in making estimates rather than not trying, accepting that values will not be exact until formal standards are developed.
Develop formal impact accounting by documenting mechanisms for impact, quantifying them with KPIs, and articulating the top 3 in the “what” section of the 5 Dimensions of Impact framework.
Loyal aims for formal impact accounting, assigning estimated dollar values to every environmental and social impact factor.
Loyal, as a generalist fund, needs universal metrics to evaluate both positive and negative impacts on the same scale, unlike specialist funds that optimize for specific metrics.
Students can participate in deal sourcing, due diligence, portfolio management, impact assessment, and fundraising.
Students gain experience in fundraising and opportunities to build relationships with high-profile INSEAD alumni and investors.
The process includes: 1) Sending a short message and introductory pitch deck; 2) Hosting a one-hour 'ask us anything' event; 3) Providing legal details, full presentation, and investor FAQ; 4) Signing a non-binding letter of interest; 5) Reviewing legal documentation; 6) Signing and transferring funds.
Yes.
Read all linked materials and attend the weekly Ask Me Anything events.
Loyal donates around 4% of the raised funds to INSEAD (1% immediately; ~3% upon investor exit). The Club can add non-INSEAD deals under deal sourcing depending on the amounts raised. Students benefit from the experience and relationships developed.
Events feature a 10-15 minute expanded presentation followed by Q&A. They occur every Thursday at 9:00, 14:00, and 21:00 EST to cover different time zones.
Keep the message short, highlight the 23% IRR, include a link to the 6-page introductory deck, and emphasize the INSEAD affiliation.
Your main role is to contact potential investors, share the intro deck, and invite them to an introductory event.
After the introduction, your role is limited, but you can attend events and meetings with the investor or hold individual meetings if it benefits the process.
Strategies include targeted list building, country-specific and sector-specific alumni lists, personal contacts, company-specific lists, INSEAD student club alumni mailing lists, and alumni association events.
The foregoing is a summary discussion of certain frequently asked questions relating to LVA’s advisory program and Advisor Agreement. This summary is provided for general informational purposes only, and may be subject to change. The information provided does not purport to address all matters relevant to Loyal, the advisory relationship or the LVA Advisor Agreement in its entirety, nor does it purport to constitute a sufficient basis for advisors to determine whether to enter into any agreement with LVA.
Furthermore, this summary is qualified in its entirety by the terms of the Advisor Agreement, does not provide any representations or warranties related to such agreements, is not legally binding and is not a substitute for a review of the full terms of the Advisor Agreement. While this summary is offered in good faith and in the hope that it may be of use to potential advisors, it is not guaranteed to be correct, up to date or suitable for any individual’s or company’s purpose. LVA and Loyal VC accept no liability in respect of this information or its use, and by using this summary you agree to hold LVA, Loyal VC and their affiliates free of any liability related to this summary.
Each company or individual is solely and independently responsible for investigating the facts relevant to its circumstances, including all matters addressed in this summary, and for determining what other sources of information to consult. Each company or individual is strongly urged to review the Advisor Agreement in detail, consult with their legal, financial, tax and other advisors, and ask any additional questions they may have of LVA prior to signing any agreements. In the event of any conflict or discrepancy between this summary and the terms of the Advisor Agreement, the terms of the Advisor Agreement shall prevail.
