Dutch Founders Fund (DFF) is a venture capital firm.
This world is unfairly distributed & we have limited resources. We, as a society, need to become more efficient and fair. We, as a movement, believe that disruptive tech companies are an important enabler for humanity to become better at this. We want to help in this development with our knowledge, network, coaching, and capital.
The world needs disruptive thinking and business models to solve the biggest problems we have as human-kind. We believe tech is a major enabler of that.
We know it’s hard to build companies, that’s why we build a community that helps founders who are tackling bigger societal problems with their companies that are agents of change to accelerate growth. We formed a network and our fund in which we give advice and experience, but also capital to those players we believe can accelerate this change and have a sustainable impact on the benefit of the world and build a sustainable company.
The world needs disruptive thinking and business models to solve the biggest problems we have as human-kind. Therefore, we like to challenge conventional wisdom, in business and in ESG.
In the last few years these terms have become increasingly more important in the VC environment. Although concepts like responsible investment, sustainability and ESG have become the new talk of town, we feel like they have always been part of the venture capital's toolkit.
It complicates things a bit that these concepts are often used interchangeably. Therefore, we feel it's useful to clarify what these terms mean to DFF, which is why we have developed this document.
“ESG” may refer to ESG integration at DFF (described further below), but is also used by DFF as an umbrella term to refer to the combined Responsible Investment, Sustainability and Impact practices.
Objectives
In all that we do as it relates to Responsible Investment, Sustainability, ESG and Impact, we try to have clarity on the objective, whether this is:
To us, responsible investment means being an active investor: Active Ownership. In addition, Responsible Investment includes ESG integration: taking into account environmental, social and governance factors in the selection and monitoring of our portfolio companies.
a. Active Ownership
We believe that investors have an incredibly important role to play in the development and governance of a start-up. DFF has:
ESG considerations are included in our active ownership practices: in our engagement with portfolio companies we will discuss ESG considerations, when relevant to the company strategy and activities, or where the portfolio company or other relevant stakeholders request it.
b. ESG integration
We take into account environmental, social and governance factors in the selection and monitoring of our portfolio companies.
After making an investment in a company we take a customized approach to ESG integration: we challenge management to think about specific ESG issues and determine to 3 what extent they can impact their business, in a positive or negative way. In certain situations, we will ask management to develop a policy, or “perspective” on a certain ESG issue. This can also be in a later stage when companies enter new growth phases.
The ESG topics that are most often material to DFF are the following:
Our portfolio company Govin offers a tool that allows other portfolio companies to obtain and provide clarity on the applicable corporate governance through a simple dashboard. The tool will be used by the management team, supervisory board members and rest of shareholders and enables efficient collaboration to support long term value creation. This tool is crucial for our active ownership and ESG integration practices.
Exclusions
We feel we cannot determine a priori which companies or businesses we will not invest in due to moral or ethical considerations; in our experience this is mostly situation-specific. Therefore DFF does not maintain an exclusion list or divestment policy. Sometimes we are introduced to an investment opportunity that makes us question if it is the type of business DFF wants to be associated with; when that happens we discuss the moral aspects of the business and sometimes this leads to a decision not to pursue the investment, even if it might otherwise be attractive from a financial point of view. These cases are documented and can be shared with stakeholders at request.
At DFF we feel we can make the most difference, whether the objective is values-alignment, financial performance or Impact, through our investments, i.e. through the selection of and support given to our portfolio companies.
Having said this, we want to take responsibility for the ESG issues we can control directly, for our relatively small team and organization. The ESG issues that are most important to DFF are:
We define “Impact” as the positive social or environmental consequences that our portfolio companies may have. Even Though Impact is a funny concept by design, we recognize theSustainable Development Goals (SDGs) as a useful framework in terms of assessing if a business activity is impactful or not.
DFF does not intend to be positioned as an “Impact fund”. Having said this,
Therefore we see it as our responsibility to encourage and challenge founders and management teams to develop clarity on their business purpose and to find ways for their businesses to have (more) Impact. This is both fundamental to the strategy and business of a company but also provides a perspective on how a company can be assessed in terms of Impact.
We are also interested in contributing to the public debate about Impact investment.
Finally, we recognize the important role of governments in addressing societal problems and are willing to be involved in exploring how public-private partnerships can drive further Impact investment.
We recognize and endorse the PRI principles, in particular the commitment to be active owners and to incorporate ESG considerations in active ownership practices. Having said this, DFF is not a PRI signatory – with our small size we feel the annual PRI reporting would be too onerous and not a good use of our investors’ and founders’ time and money.
We will, however, reconsider becoming a signatory to the PRI at a later date when our scale and resources allow this and if we feel joining the PRI community has significant added value for DFF.
We believe that measuring is important – what gets measured gets managed. At the same time, we recognize that many things in the start-up environment, especially those related to sustainability, ESG and impact, cannot be effectively measured. For things we cannot measure but that we believe are relevant to our investments, we develop proxies, measure ‘qualitatively’, or simply ask lots of questions.
DFF will report on its efforts, challenges and achievements in ESG on an annual basis. For this reporting, we will seek both quantitative as well as qualitative input from portfolio companies. In reporting on climate and energy related issues we will be supported by the tools offered by our portfolio firm Minimum.
The Dutch Founders Fund B.V. (“Dutch Founders”) and the portfolio companies which it advises have a mission to build a sustainable, resilient, diverse, inclusive and tech-enabled ecosystem in Europe and beyond.
This document (the “ESG Policy”) sets out Dutch Founders’s approach to investing responsibly, which includes our take on Environmental, Social, and Governance (“ESG”) issues, as well as our commitment to contribute to a better tomorrow. The policy and her implications apply to all of the funds, existing portfolio companies, new investments and Dutch Founders’s business operations. We strive to adhere to this ESG policy at all times.
Moreover, this document will serve to illustrate how our fund has implemented procedures and guidelines to meet our ESG goals and standards.
The Dutch Founders Fund B.V. (“Dutch Founders”) and the portfolio companies which it advises have a mission to build a sustainable, resilient, diverse, inclusive and tech-enabled ecosystem in Europe and beyond.
As of this writing, Dutch Founders has stipulated the following factors in our interpretation of the ESG-standards in investing responsible:
The abovementioned factors are by no means exhaustive and Dutch Founders will frequently revist and refine our interpretation of it.
At the Dutch Founders Fund, we firmly believe that entrepreneurs are the catalysts in changing the world for the better. We know that doing good for the planet and making money are not mutually exclusive, and therefore we have set out on a mission to fund companies that create societal, financial, personal and environmental impact.
The ESG principles serve as the core of our investment rationale, purpose, norms and values. We recognise that adherence to the ESG principles might impact the success of our investments - both positive and negative. Most importantly, we also recognise the major role that venture capital funds such as ourselves play in bringing ever-lasting change in the world. We don’t just passively finance those who challenge the status quo, we deploy our experience, network and know-how to make sure that our portfolio companies are contributing to society at large. A genuine focus on doing well for their own employees, customers, suppliers, the environment, shareholders and anyone else involved is the key ingredient to success. In the end, creating long lasting value will allow everyone to reap the fruits of progress.
We actively challenge our team and our portfolio companies to abide by the highest standards. The Dutch Founders Fund strives to invest in those who rate high on our ESG-index. This means that we look for companies who use sustainability as a key value-driver.
It is important to note that our investment policy does not necessarily focus on financial products that aim to be purely sustainable investments, the so-called 'impact investments'. Neither does our fund focus on financial products with sustainable characteristics in particular, as we are often unable to adequately assess the sustainability risks and their effects on the financial results of the investments. Where we can demonstrably quantify these negative effects, we aim to take them into account in our investment decisions.
At Dutch Founders, the ESG principles are deeply rooted in our culture and our screening process. Across the entire investment cycle, from initial assessment to due diligence, ownership and exit, we always do our utmost to ensure that the ESG factors are safeguarded. This includes the following: