btov Partners
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btov Partners

Seeding entrepreneurial success with clear ESG goals

Founders often think their business is not mature enough to investigate sustainability and ESG aspects. What we have seen at btov is the precise opposite: “the earlier the better.”

Over the course of btov’s 20 years working in the startup industry we have observed — and learned the hard way — the impact that a team’s values can have when clearly articulated from day one. The following examples demonstrate the importance of looking into ESG as early as possible:

Let us start with the “G” part, relating to Governance issues. Wirecard is a very prominent example of how one can fail on governance with dozens of billions EUR of value destroyed. For more than a decade we heard that “it is not the best company to partner with — they do all kinds of borderline things”. It was first just a rumor in the FinTech industry, but in hindsight we know: the company had bad DNA, from the top. Cultures presumably always evolve, but fundamental values do not. Every company needs a compass of values to steer it towards the appropriate goals. And why not adjust this compass right at the beginning of the long hike and take half a day or even several days to do so? At Wirecard, they either had the wrong corporate values or elected a supervisory board that was incompetent and unable to properly assess the corporate risks. Both are key governance topics.

Let’s continue with “S” for “Society”. Since there are always three fingers pointing at you when you point at others, here is some ruthless self-criticism. When we notarised the foundation of BrainsToVentures AG in July 2000, we were six founders, five of them men and one woman. Shortly afterwards, another female partner joined btov. When we split our company into umantis and btov a year later, our quota of women even shot up to 1/3. Two years later, however, the then “female partner” left us, and we were left with two men. Today we count twelve white men as btov partners. These twelve are very (!) diverse in terms of characters, skills and experiences as well as age cohorts. However, as part of our own ROSE assessment at btov, 20 years after the company was founded, we have defined the goal of substantially increasing the number of women among the venture partners in relation to men in the next two years and to be able to welcome at least two women full-time partners at btov by the end of 2025. If we had formulated “diversity goals” at the time of our founding, we would not have to struggle today to become a more diverse team. We have learned our lesson. Since it is never too late to deliver we today openly share our vision, mission and values here. As an organization counting 250 individuals today (our dear btov Angel Investors and 34 btov employees) we are going the extra mile supporting women in the european startup ecosystem. If you know about talented women in need of support please let them know about our initiative here.

Finally, an example for “E” — related to Environment. Since its foundation, our portfolio company Armed Angels has made sure that its fashionable clothes are produced in an ecologically and socially sustainable way. This is complicated and makes the product more expensive. But consumers have a choice, and Armed Angels’ great business success shows that people are willing to pay for their efforts. Last November, when all brands and retailers were throwing discounts around, Armed Angels implemented the following action: buyers can choose between getting a 30% discount or saving a piece of rainforest. The result of that approach? Armed Angels customers walk the talk. They consciously pay a higher price and contribute to sustainable production and consumption. Armed Angels had an impressive record month thanks to this initiative.

ESG is not only an ethical thing to do. It is not for dreamers and visionaries. It is one of the most comprehensive views on a business one can take, to truly understand the interaction with all stakeholders. Hence it is most relevant to early ventures that are establishing their processes and where everything is still malleable.

In successful businesses everything compounds, leading to exponential growth. We have the extraordinary choice of which direction to take.

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