Norrsken Impact Report 2021 — why we believe in radical transparency

For the second year in a row, we have published our Norrsken VC Annual Impact Report 2021.

It is still as nerve wracking to do this as it was when we did it the first time around — (see the original blog post from last year). All of that still applies today. But just to recap:

There’s currently no common definition of “impact” within the VC and startup ecosystem. In fact, there are probably as many definitions of impact as there are impact investors. This means that many simply choose to stay away from this hairy topic, because it is hard to put something meaningful together.

We have a dream (ever heard that one before?) that one day, every organization on the planet will need to measure their true cost and benefit to people and the planet. And the ones that are clearly net positive will be defined as impact companies. The reality is that today it is still difficult to measure impact and there is no one single golden standard, especially for early stage start-ups. However, we don’t want to sit and wait, we want to start measuring things here and now and through that process and learning drive the industry forward one small step at a time.

This is where our Annual Impact Report comes in. So, what’s so special about it? Isn’t it now almost a market standard to publish one? Yes, and that’s a good start. But we want to go further. We fully disclose our impact measurement framework and open it up for discussion. We also disclose the hard, tangible impact KPIs that we track for each portfolio company, as well as the underlying data and progress.

So — back to why we’re nervous about making all of this public? Well first of all, because we know that we haven’t 100% cracked it yet. There is room to take this further and make it better, no doubt about that. There’s no off-the-shelf framework to use for impact measurement, especially when you are dealing with very early-stage start-ups that have limited resources at their disposal, and whose business models constantly evolve. So we took the best of what we could find and adapted it to the context of early-stage start-ups. Sometimes we are able to track the real underlying impact (such as CO2 reduction or removal), sometimes we have to go with proxies, such as a number of companies tracking and improving ESG compliance in their supply chains (which is inherently a net positive for people and planet).

Second reason: There’s always a risk of numbers being taken out of context. For example, we set impact targets for each of our companies — what will these companies achieve in terms of impact over the life of our fund (10 years, give or take)? We then break these goals up annually, to allow us to check performance and how we’re trending vs target for any given year.

So far, we’ve achieved 11% of our long term impact goals — this is calculated cumulatively across the years. There’s naturally a long way to go, because our fund is still early in its lifecycle.

Ultimately what matters to us most — are we going to reach our impact target over a 10 year horizon?

On that point, we can safely say that yes — we think so. But hey, it’s the first time we do this, so let’s see how things play out.

Either way — we are going to keep sharing our results and our progress transparently. Because that’s really the only way that we (and the rest of the industry) can learn and get better at this as we go.

Now — go check out the report to see the awesome work that our portfolio companies are doing. They are the true heroes in this!