Sustainable investing in early B2B SaaS
As active investors that typically take board seats in the companies we invest in, we have a lot of opportunity to make impact, and therefore also responsibility to be a good force in the world. To guide our work we have therefore developed a unique approach that suits the stage of companies and the type of ESG challenges that are most prevalent in our space of investing (early stage B2B SaaS).
“With great power comes great responsibility”
- Stan Lee (and many others…)
Having an ESG strategy in 2023 is important for multiple reasons:
As key strategic decision makers in companies, investors need to play their part in contributing to a more sustainable world
ESG helps create loyalty amongst stakeholders (customers, employees, investors)
It minimizes risks and liabilities across the portfolio in regards to e.g. security, health, climate
Academic research also shows that ESG correlates with financial benefits
A good framework for thinking about the challenges and impact you want to make, are the 17 sustainable development goals set up by UN:
As investors in B2B SaaS, we believe that we can support all of the UN SDGs, while also proactively making contributions across a selected set of goals.
Gender equality: Promote equality in the companies we invest in throughout operations, management and BoD
Decent work and economic growth: Invest in companies that create new jobs, and ensure fair employment agreements
Climate action: Invest in software that in it’s nature leaves relatively low CO2 footprint, and help our companies track and mitigate their emissions.
Promoting ESG requires a structured framework and process. And it impacts everything we do:
How we select our new investments
How we work with our portfolio
How we contribute to the broader investing community
Selecting new investments.
When screening for new investments, the first thing we do is to actively exclude certain industries with high ESG risks (e.g. tobacco, unregulated gaming, production of fossil fuels etc.)
Secondly, we have developed a structured framework for assessing the risks and current ESG maturity across areas of “strategy & ambition”, “communication & training”, “existing breaches & remarks”, “policies & practices in place”, “governance”.
Given the early stage of companies we invest in, few will be best practice across all these dimensions. The most important thing is to be aware of the risks, and ensure that there is an ambition and a credible path to improving in the short term.
However - there are of course a few hygiene factors, that we never compromise on. For example - The business model cannot fundamentally oppose any of the UN SDGs and management needs to show an ambition to actually improve.
Working with our portfolio.
The most important part of our ESG strategy is how we work with our companies to help them improve.
As with all changes, it’s important to know the objectives you want to achieve, break it down into concrete activities that are prioritized over time, assign clear responsibilities and means of communication, and measure and track the progress over time.
We have developed a view of how B2B SaaS companies in our stage of investing can break down their ESG journey - starting with the basics of setting up the plan & responsible people, and building more sophistication over time (read more in in our report)
Contributing to the broader community.
There are many things we can do to promote gender equality, decent work and economic growth, and climite impact across the broader B2B SaaS and investing community. A few of the ways we will be contributing during 2023 are through:
Promoting female entrepreneurs & investors through female-oriented networking sessions, 1on1 coaching & sparring with female entrepreneurs and investors on topics close to Ampli’s core competencies
Allocating time & money in high impact initiatives in third party initiatives that support the goals that we are promoting
Open source our ESG practices; we believe that by making our methodologies & practices public, we can both provide inspiration and insight into our work, while also getting input for us to continue improving.
If you want to learn more about how we work with promoting sustainability and view the full frameworks that we use - read our full report (below). If you want to discuss ESG in early stage investing, please do not hesitate to reach out.