ESG Adds Flavour To Venture Investments

The global economy is transforming in the face of both a lingering pandemic as well as the many challenges of the climate crisis. Existing business models are being disrupted and completely new fields of endeavour are opening to entrepreneurs. For example, we already know that climate tech may be the single biggest economic opportunity of our lifetimes, with over US $500 Billion invested in 2020 alone. Building environmental, social and governance (ESG) values into our startup DNA is part of seizing these new opportunities.

Now the UN has developed a guide incorporating ESG into investment policies. The Principles for Responsible Investment (PRI) framework was drawn up with the support of major institutional investors and has at its heart the undertaking that investors weave ESG considerations into all their decision-making, disclosure and reporting processes. Signatories include some of the largest and most influential investors such as Sequoia and Goldman Sachs.

The social and governance part includes growing diversity among startup founders and the boards and advisors that guide them. There’s still much work to be done of course, but PRI is a good start. Over the previous two years, women founders have made up the majority of participants in business startup programmes run through UCE and ThincLab Canterbury. According to Forbes, a number of studies point to female led startups exceeding investment returns compared to those with men in charge. Yet female founders receive less interest from venture funds globally. Could we see this turn around in future?

Creating opportunities for women founders is important, but perhaps the most significant diversity consideration involves cultivating diversity of thinking in venture founders. Skilled migrants from diverse ethnic backgrounds bring strong work ethics and different perspectives to business problems that can accelerate progress within early stage companies. Four out of the five most valuable technology companies in the world were founded by first or second generation immigrants. But it’s a diversity discussion that we rarely hear mentioned in New Zealand.

Mizuki Azai and Olexiy Meshechko (pictured above) brought their startup Caterway along to the ThincLab Canterbury Sprint programme in 2020. The couple met in Christchurch after arriving from Japan and Ukraine respectively. 18 months downstream, the online business continues to make ordering corporate catering easy and has now secured a service contract with a large multinational organisation. The company is also exploring value added services to assist their clients to manage and minimise non-recyclable waste.

Companies like Caterway that align with ESG values are the future. If you are Canterbury based, building a scalable, future focused business and would like support with strategy, capital-raising or business development – please reach out to the ThincLab Canterbury team.