Backing Novisto’s $8m Series A to fuel its mission to empower companies to create value from their ESG strategy, data and reporting
We’re happy to announce that we are leading Novisto’s US$8m Series A round. Headquartered in Montreal, Novisto is on a mission to democratize state-of-the-art ESG data monitoring, reporting and insight across the globe.
In the last 12 months, more than 50 major corporations, including Amazon, Walmart, General Motors, and FedEx, have announced plans to be carbon neutral or negative by 2040 in an effort to curb climate change. With growing pressure from investors, regulators, consumers and employees to act on ESG data, corporate executives across industries have made the mission of improving their practices one of their top priorities. However, tracking ESG metrics and content is currently a painful and confusing process involving heterogeneous standards, burdensome internal challenges, and countless manual tasks.
With a growing amount of green assets under management, increasing by 42% to $17.1 tn in the US alone, we see huge demand from investors for ESG information to further understand risks associated with a company. Over the last year, 90% of companies listed on the S&P 500 completed some form of ESG reporting, up from just 20% in 2011. Unlike financial information however, ESG reporting isn’t as straightforward as using IFRS or US GAAP — companies need to navigate a mishmash of standards, including but not limited to UN PRI, TCFD, SASB, CDP, <IR>, and CDSB. Because regulatory bodies have been slow to declare a universal standard, ESG rating agencies and scoring methodologies have proliferated in a rush to fill the knowledge gap. While these are helpful tools for investors and other stakeholders, the lack of a consistent surveying methodology creates a mountain of work for already thinly stretched sustainability teams across organizations.
The following points outline our investment rationale:
- Europe is leading the charge with the U.S. playing catch up; there’s no going back to a reporting standard without ESG expectations.
- Heterogeneous standards and frameworks lead to confusion from investors and companies.
- Independent rating and research solutions are popping up, but these put immense stress on individuals within companies as ESG data is siloed across various business functions within organizations.
- There’s surging interest in ESG investments as green assets under management and green bond issuances increase. Assets under management with an ESG mandate grew 34% between 2016 to 2018.
- Consumers want to play a role here too, but rely on the companies themselves to share information about their ESG practices.
Enter Novisto: An end-to-end software solution that automates data collection, powers benchmarking, centralizes record-keeping, and provides AI-driven strategic and operational insights to large enterprises. As investors, we had conviction that the ESG reporting industry needed help, ASAP, as the tide of socially responsible investing threatened to drown companies that lagged behind. After being introduced to Novisto through Diagram Ventures, our long-standing pre-existing relationship with Charles Assaf gave us confidence that this ESG solution would revolutionize sustainability reporting and democratize access to companies globally. Charles, a seasoned entrepreneur with deep B2B SaaS experience, along with his co-founders Edouard Clément and Marian Borca, have the expertise to attain their unique vision for Novisto — to become the global ESG standard for companies looking to create value from their non-financial data. Another valuable addition to their team is Marie-Josée Privyk (Head of ESG Innovation and Customer Success), a seasoned capital markets professional who is a renowned thought leader in sustainable development. We are very excited to be backing this incredible team.
White Star Capital’s investment thesis has always integrated a range of ESG considerations, which led us to become a signatory of the United Nations’ Principles of Responsible Investment, the world’s leading proponent of responsible investment. With investments like Dialogue, Parsley Health, Finn.auto, Butternut Box, Tier Mobility, and now with Novisto, we are doubling down on our conviction that companies prioritizing ESG as a central value driver are better positioned to thrive and succeed in this evolving global economy.
We based our investment on the conviction that ESG had reached a tipping point in society. “Greenwashing” is no longer acceptable, with investors and stakeholders growing increasingly focused on digging deeper, asking questions, and observing material changes. ESG has broken the glass ceiling to evolve beyond a PR topic into being a pressing C-Suite issue.
Four points support our overall belief that ESG’s big moment has arrived:
- Ubiquity of ESG reporting. We think that soon it will be as commonplace as SEC financial statements.
- Convergence of standards and frameworks. One common guideline to rule them all!
- Transition from voluntary to expected. Companies without ESG mandates will be the odd ones out, overlooked for investment opportunities and questioned for their lack of disclosure
- Regulatory tailwinds. Regulations have been a long time coming for the U.S. (extrapolating our experience with ESG regulation that LPs and companies in Europe have been dealing with). They’re now becoming a reality with Biden’s recent appointment of a Senior Policy Advisor for Climate and ESG.
We see a promising future for Novisto and their vision that supports a brighter, greener future for all. Mass corporate adoption of ESG disclosure is right around the corner and we believe that Novisto is ideally positioned to capitalize on this global opportunity.
About White Star Capital
White Star Capital is a global multi-stage technology investment platform that invests in exceptional entrepreneurs building ambitious, international businesses. Operating out of New York, London, Paris, Montreal, Toronto, Tokyo, and Hong Kong, our presence, perspective, and people enable us to partner closely with our Founders to help them scale internationally from Series A onwards. Find out more about how we venture beyond at www.whitestarcapital.com or follow us on LinkedIn, Twitter or Facebook.