Building better cities

Clara Brenner, MBA ’12, arrived successful Cambridge connected the lookout for a concern partner. She wanted to commencement her ain ­company—and ne'er person to woody with a brag again. She would spell it unsocial if she had to, but she hoped to find idiosyncratic whose skills would complement her own.

It’s a communal MBA tale. Many radical be concern schoolhouse with hopes of uncovering the one. Building that narration is truthful important to a company’s instauration that it’s been described successful romanticist terms: Networking is akin to dating around, and immoderate presumption settling down with a concern spouse arsenic a matrimony of sorts.

Brenner didn’t person to look for long. She met her match—Julie Lein, MBA ’12—soon aft arriving astatine Sloan much than a decennary ago. But their archetypal brushwood wasn’t precisely auspicious. In fact, their narration began with an expletive.

Lein was sitting astatine a paper array successful a hallway successful E52, glumly selling tickets to a manner amusement featuring work-­appropriate apparel for women—at that time, the marquee lawsuit for Sloan’s Women successful Management Club, and 1 that some Lein and Brenner thought was patently absurd. 

Lein had nary involvement successful attending, but she wanted to enactment the club’s ngo of boosting women successful business. “She looked precise miserable,” says Brenner. Lein asked if she wanted to bargain a ticket, Brenner recalls, and “I deliberation I said, ‘F*** no.’” 

“We some bonded implicit the information that this was specified a anserine idea,” says Lein. (The manner amusement has since been retired, successful portion acknowledgment to Lein and Brenner’s lobbying.)                             

Today, the 2 tally the Urban Innovation Fund, a San Francisco–based task superior steadfast that has raised $212 cardinal since 2016 and invested successful 64 startups addressing the astir pressing problems facing cities. It has supported businesses similar Electriphi, a supplier of EV charging and fleet absorption software, which was acquired by 1 of the biggest names successful the car industry. And it funds companies focused connected helping kids larn to code, providing virtual tutoring services, offering financing for affordable housing, and more. The companies successful its portfolio person a full worth of $5.3 billion, and astatine slightest 8 person been acquired frankincense far.                             

Though Brenner and Lein deed it disconnected quickly, they weren’t an evident acceptable arsenic concern partners. Brenner arrived astatine Sloan aft weathering an aboriginal vocation successful commercialized existent property conscionable aft the 2008 fiscal crash. She hoped to commencement her ain institution successful that industry. Lein, connected the different hand, had worked successful governmental polling and consulting. She initially planned to get an precocious argumentation degree, until a mentor suggested an MBA. She hoped to commencement her ain governmental polling steadfast aft graduation. 

Ultimately, though, their instant kinship became much important than their taxable substance expertise. Brenner, says Lein, is “methodical” and organized, portion she “just goes and executes” without overthinking. Their relationship—in business, and inactive arsenic adjacent friends—is rooted successful spot and a committedness to realizing the imaginativeness they’ve created together.

“We were capable to spot that ... our skills and benignant were precise complementary, and we conscionable were capable to bash things amended and faster together,” says Brenner. 

In 2012, the 2 teamed up to tally Sloan’s 2nd Women successful Management Conference, which they had helped recovered the twelvemonth before. It was then, they say, that they knew they would enactment unneurotic aft graduation. 

Still, they had occupation agreeing connected the benignant of task that made the astir sense. Their archetypal talks progressive a tug-of-war implicit whose country of expertise would win—real property oregon policy. 

But successful the summertime of 2011, they’d some happened to onshore internships astatine companies focused connected challenges successful cities—companies that would present beryllium called “urban-tech startups,” says Brenner, though that word was not utilized astatine the time. The overlap was fortuitous: When they compared notes, they agreed that it made consciousness to analyse the imaginable for companies successful that emerging space. Lyft was conscionable getting its start, arsenic was Airbnb. After exploring the thought further, the 2 concluded determination was immoderate “there” there.

“We felt similar each these companies had a batch successful common,” says Brenner. “They were solving precise absorbing assemblage challenges successful cities, but successful a precise scalable, nontraditional way.” They were besides moving successful highly regulated areas that VC firms were often hesitant to touch, adjacent though these companies were attracting important attention. 

To Brenner and Lein, immoderate of that attraction was the incorrect kind; companies similar Uber were making what they saw arsenic evident missteps that were landing successful the news. “No 1 was helping [these companies] with, like, ‘You should prosecute a lobbyist’ oregon ‘You should person a argumentation team,’” says Brenner.

The 2 saw an accidental to money businesses that could marque a measurable affirmative interaction connected municipality life—and to assistance them navigate regulatory and argumentation environments arsenic they grew from startups to immense companies. 

Upon graduating successful 2012, they launched Tumml, an accelerator programme for specified startups. The sanction was drawn from the Yiddish connection tummler, often utilized by Brenner’s grandma to picture idiosyncratic who inspires others to action. 

At the time, Brenner says, “world-­positive investing” was “not chill astatine all” among funders due to the fact that it was perceived arsenic yielding little returns, adjacent though increasing numbers of tech companies were touting their efforts to amended society. In different antithetic move, the partners structured their startup accelerator arsenic a nonprofit evergreen fund, allowing them to put successful companies continuously without mounting a fixed extremity date. By the extremity of their 3rd year, they were supporting 38 startups. 

Tumml recovered occurrence by offering money, mentorship, and guidance, but the brace realized that relying solely connected fickle philanthropic backing meant the exemplary had a ceiling. To grow their work, they retired Tumml and launched the Urban Innovation Fund successful 2016 with $24.5 cardinal successful archetypal investments. While Tumml had offered comparatively tiny checks and enactment to companies astatine the earliest stages, UIF would let Brenner and Lein to supercharge their backing and involvement. 

Their absorption has remained connected startups tackling municipality problems successful areas specified arsenic nationalist health, education, and transportation. The types of companies they look for are those that thrust economical vitality successful cities, marque municipality areas much livable, oregon marque cities much sustainable. As Tumml did, UIF provides not conscionable backing but besides accordant enactment successful navigating regulatory challenges.

“It’s a very, precise tiny subset of companies that tin some enactment connected a occupation that, astatine slightest successful our minds, truly matters and beryllium an tremendous business.”

And, similar Tumml, UIF has taken connected industries oregon companies that different investors whitethorn spot arsenic risky. When it was raising its archetypal fund, Lein remembers, they pitched a ample instauration connected its vision, which includes investing successful companies that enactment connected clime and energy. The organization, burned by the wealth it mislaid erstwhile the archetypal cleantech bubble burst, was highly wary—it wasn’t funny successful a money that emphasized those areas. But Lein and Brenner pressed on. Today, clime tech remains 1 of the fund’s largest areas, accounting for much than a sixth of its portfolio of 64 companies (see “Urban innovation successful action,” astatine right). In summation to Electriphi, they person invested successful Public Grid, a institution that gives households entree to affordable cleanable energy, and Optiwatt, an app that helps EV drivers docket charging astatine times of time erstwhile it is cheaper oregon cleaner.                             

“They took risks successful areas, [including] mobility and transportation, wherever different radical mightiness not play due to the fact that of argumentation and regularisation risk. And they were consenting to deliberation astir the public-private partnerships and what mightiness beryllium needed,” says Rachel Sheinbein, MBA ’04, SM ’04, a Bay Area–based angel capitalist who has worked with the Urban Innovation Fund connected investments. “They weren’t acrophobic to instrumentality that on.”

Lein and Brenner person besides invested successful wellness companies similar Cleancard, which is moving to supply at-home investigating for cancers, and startups creating workflow tools, similar KarmaSuite, which has built bundle to assistance nonprofits way grants. 

Meanwhile, they person formed a wide nett and built a portfolio affluent successful companies that hap to beryllium led by entrepreneurs from underrepresented groups: Three-quarters of the companies successful UIF’s existent portfolio were founded by women oregon radical of color, and astir 60% see an migrant connected their founding team.  

When it comes to selecting companies, Brenner says, they marque “very calculated decisions” based successful portion connected regulatory factors that whitethorn impact profits. But they’re inactive looking for the immense returns that thrust different investors. 

“It’s a very, precise tiny subset of companies that tin some enactment connected a occupation that, astatine slightest successful our minds, truly matters and beryllium an tremendous business,” she says. “Those are truly the companies that we’re looking for.”

One of the astir evident examples of that winning operation is Electriphi. When Brenner and Lein invested successful the company, successful 2019, the Biden medication hadn’t mandated the electrification of national car fleets, and the Inflation Reduction Act, which included fiscal incentives for cleanable energy, hadn’t yet been drafted. And California had yet to denote its volition to wholly signifier retired gas-powered cars. “It was not a blistery space,” says Brenner.

But aft gathering with Electriphi’s team, some Brenner and Lein felt determination was thing there. The partners tracked the startup for months, saw it achieving its goals, and ended up offering it the largest investment, by respective orders of magnitude, that their money had ever made. Less than 2 years later, Ford acquired it for an undisclosed sum. 

“When we were primitively talking astir Electriphi, a batch of radical were like, ‘Eh, it’s going to instrumentality excessively agelong for fleets to transition, and we don’t privation to marque a stake astatine this time,’” Sheinbein recalls. But she says the partners astatine Urban Innovation Fund were consenting to instrumentality connected an concern that different radical were “still a small spot hesitant” about. Sheinbein besides invested successful the startup. 

GABRIELA HASBUN

Impact investing has present taken basal successful the gathering wherever Lein and Brenner archetypal met. What was erstwhile an often overlooked investing area, says Bill Aulet, SM ’94, managing manager of the Martin Trust Center for MIT Entrepreneurship, is present a halfway constituent of however Sloan teaches entrepreneurship.

Aulet sees Urban Innovation Fund’s social-enterprise investing strategy arsenic precise viable successful the existent market. “Will it outperform cryptocurrency? Not close now,” helium says, but helium adds that galore radical privation to enactment their wealth toward companies with the imaginable to amended the world. 

Lein, who worked arsenic Aulet’s teaching adjunct astatine Sloan for a people present known arsenic Entrepreneurship 101, helped found the mold astatine Sloan for a social-impact entrepreneur—that is, idiosyncratic who sees doing bully arsenic a captious objective, not conscionable a selling strategy.

“Entrepreneurs don’t conscionable person to recovered startups,” says Aulet. “You tin besides beryllium what we telephone an entrepreneurship amplifier,” which helium defines arsenic “someone who helps entrepreneurship thrive.”

When they marque investments, VCs thin to prioritize specified things arsenic the request for a company’s products and the size of its imaginable market. Brenner and Lein accidental they wage the astir attraction to the squad erstwhile deciding whether to marque a bet: Do they enactment unneurotic well? Are they obsessive astir accomplishing their goals? Those who person watched UIF turn accidental Brenner and Lein’s concern fits that illustration itself. 

“I tin conscionable archer erstwhile a squad truly respects each different and [each] sees the worth successful the different one’s brain,” says Sheinbein. For Lein and Brenner, she says, their “mutual respect and admiration for each other” is obvious. 

“We went to Sloan, we spent a clump of money, but we recovered each other,” says Lein. 

“We couldn’t hold connected a caller urban-tech startup to start,” she adds, truthful instead, they built an ecosystem of them—all successful the sanction of improving cities for the radical who unrecorded there.