PreSeed Ventures Management Tech Fund I ApS, CVR-no. 41 39 83 02 has PreSeed Ventures Tech Fund I K/S, CVR-no. 41 44 50 41 under management as an alternative investment fund (“PSV Tech”).

Integration of sustainability risks in the investment decision-making process

A “sustainability risk” refers to an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
When making investments, consider the ethical, environmental, and societal consequences of such investments.
We are not philanthropists, nor are we merely cynical investors. We believe that now more than ever, sustainable and conscious businesses will lead the way in solving the greatest global problems of tomorrow, and hence we are naturally devoting more and more attention in terms of our investment practices on startups with a clear and positive impact.
We adhere to the Six Principles of Responsible Investment (PRI) which is formulated by United Nations. Read more about the PRI, the principles, and the objectives for responsible investment activities here.
The principles form the basis on which we seek to enhance our investment activities. The increased amount of focus on responsible and conscious practices shines through in every step of our investment funnel – from the very early screening of potential investment cases until the ink on the term sheet is dry (and beyond but we address this later). Let’s start from the top.

Early screening and assessment

A fundamental part of every VC’s investment practices is located in the early sourcing and screening of startups. Every year we screen hundreds of startups in the pursuit of identifying the most promising Danish tech-startups. In this process, we have implemented some specific initiatives that will help us take a 360° view of the potential investment case and make sure that no stone is unturned – also when it comes to ESG considerations.
Furthermore, we’re committed to detecting patterns through the use of our web-crawler tool. We use this tool to screen thousands of startup’s websites for ESG-related messages. This tool is an integrated part of our process when conducting early screening and assessing our dealflow. While this may not provide a certain picture of what startups in fact are doing in terms of their ESG efforts, it allows us to analyze what specific ESG themes are trending, and how these trends change over time. When it comes to all the inbound applications that we receive, we make sure to track the diversity of founder teams to help us identify potential skewed patterns.

ESG in Due Diligence

An integral part of our investment process is of course conducting thorough due diligence, which also includes investigating the positive and potential negative impact of the investment.

We hold ourselves accountable to the highest standards and PSVTech is proud to have Limited Partners as ATP and Vækstfonden that we know do the same. Nothing less can do it. Initially, that means eliminating all businesses in verticals like selling weapons, pornography, or in any way violating human rights – just to name a few (see the full Negative Investment Criteria list here).

In due diligence, all startups are as well evaluated based on our own ESG checklist (see the full checklist for PSVTech here).
In this process, we conduct an ESG analysis identifying not only potential risks associated with the particular company – but also actively look for ESG opportunities that may create a competitive edge for the company as well as how their operations are responsible and sustainable both to our planet, population and democracies.
Some of the ‘Human first’ parameters we look for when evaluating the potential investment are diversity in the founder team, the mental resilience of the team and the ethics of their work culture, strong data ethics and practices complying with legislation, UX and product design for low environmental impact, diversity, inclusion and so on (Humane technology).
We furthermore look into the legal and financial compliance. We impose strong demands and ask for founder warranties when it comes to tax matters, ensuring that all our portfolio companies comply with and pay their taxes in Denmark in a responsible way.

Deep-diving into ESG as an investment theme

We do not only assess investments based on ‘Human first’ parameters, it is also a separate theme of our investment thesis. This is part of our hypothesize about high-potential technological trends and key drivers within specific verticals.
Methodologically zooming in on specific verticals allow us to promote the tech startups that will become the next front runners of conscious, sustainable business models.

There are four core reasons for integrating the ESG framework into our investment thesis:

• It is vital to mitigating risk in the investment. Companies who neglect to consider ESG impact and risk are more vulnerable to regulation and legislation.
• Consumers are increasingly concerned with the social and environmental impact of brands, therefore there is huge commercial potential in working strategically with the ESG framework.
• It is easier to both attract, motivate and retain the best talents to companies with a clear sustainable profile.
• By developing technologies and companies that help humanity face some of the biggest global challenges, founders are tapping into the biggest business potentials and have the opportunity to build defendable, future-proof category winners.
  Some of the technologies that are already tapping into these possibilities are:
  • Software enabling the transition to renewable energy
  • Vertical farming
  • Fighting climate change and CO2 emissions
  • Democratizing financial opportunities
  • Waste management
  • Digital health to empower everyone to take ownership of their wellbeing

No consideration of sustainability adverse impacts

PSV Management Tech Fund I ApS is to the largest extent possible considering the sustainability risks in its investment decisions.

However, PSV Management Tech Fund I ApS does not consider all of the specific adverse impact indicators as set forth in Table 1-3 of Annex 1 of the Commission’s delegated regulation supplementing Regulation (EU) 2019/2088 (the Sustainable Finance Disclosure Regulation) in its investment decisions. It simple does not make any sense for PSV Management Tech Fund I ApS and the Investment Team of PSV Tech01 to assess and track the listed factors when investing in tech-startups in the pre-seed stage. As provided for in this ESG policy, PSV Management Tech Fund I ApS has taken appropriate steps towards ensuring sustainability in the investments, including the conduction of ESG Due Diligence, filling out a ESG Compliance checklist as well as a ESG napkin.

Remuneration policies

Members of the Investment Team who assess and recommend potential investments on behalf of PSV Tech01 do and will not receive bonus or additional remuneration to their base salary if they propose investments that are not ESG-compliant. In the same vein, the members of the Investment Team do not obtain any financial or economic benefit if non-ESG-compliant investments are conducted or suggested.
Accordingly, the remuneration policy of PSV Tech is structured in a way that it does not encourage excessive risk-taking with respect to sustainability risks.
The Investment Team and the management of PSV Tech will soon discuss how the investment team can on the contrary be economically awarded for carrying out ESG-compliant investments.

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