We asked Dilan Mizrakli Landgraff from Antler a few questions on ESG investing and reporting in venture capital funds:
In your opinion, how has the venture capital industry changed due to the rise of sustainable investment? What trends and alterations can you predict for upcoming periods?
The main drivers have been stronger regulation, more influential LPs and employee activism. Such push from the investor and regulator side coupled with the ethical fund managers’ desire to make the world a better place led to a more formalized approach to ESG considerations for many VCs. We will do everything to drive that momentum in a direction where it makes the industry more sustainable, responsible and inclusive.
On the topic of impact - we see a clear trend around tech companies (and VCs) focusing on climate action but more coming through on the social challenges too such as access to education, healthcare and financial services.
On the ESG side - important that these factors are considered carefully and how they might affect the companies as they grow. It is important to consider these during the due diligence phase but also for ongoing monitoring.
Overall, there is a strong trend towards more formal approaches to responsible investing including sustainability considerations being embedded into the deal documentation. There is also a strong pursuit of better alignment with values of the VC investors.
How does your fund incorporate ESG criteria into investment decision making? What kind of ESG investing strategy do you currently follow in the fund?
Incorporating ESG criteria into investment decisions is a very key topic for us – as we, as an early stage VC investor, recognise our ability to influence founders to set the right foundation for their business early on - and we take that responsibility seriously.
We integrate ESG into our investment decision making process through:
- A Responsible Investment (RI) policy that covers all locations with our exclusion list
- Investment assessment includes ESG considerations
- Portfolio companies have to sign a document we call ESG for portfolio companies which is essentially an agreement they adhere to our ESG values and reflect these in their business operations
- We have an ESG data provision being incorporated into our term sheets (already done for follow on investment vehicle)
- We tag portfolio companies to SDGs, if applicable and we also evaluate whether a company can be defined as impact
When it comes to the ESG reporting, what are your LPs’ expectations on ESG reporting and what kind of data do investors prioritize in the reports? In your opinion, are the GPs able to provide the required relevant data?
We invest at pre-seed to series C, so very early stage VC. We are aware founders have a huge amount of priorities in the earliest days so striking the right balance of engagement and data collection is important on the topic of ESG. We also recognise that we have a fiduciary duty to our investors - we strongly believe that awareness and understanding of ESG will lead to better investment decisions and sustainable businesses.
We are developing some ESG tools for our founders for education and enhancing our data collection process. These have been designed to allow an element of self-service for founders and to see whether they are on track from the Antler risk management perspective when it comes to non-financial factors. We want founders to understand how ESG factors can create both risk and opportunity for them.
This topic could arguably be more important for high growth companies. The investors at a later stage will require more data on ESG and so our job is to prepare our founders for this in the future.
Mostly we see LPs focus more on the topic of carbon & diversity metrics, but we see this evolving to include more in the future.
Interested to get more insights?
Join 500 Global, Antler, Kinnevik, Elaia, Partners, Hadean Ventures and other VCs to discuss ESG investing and reporting topics deeply from different perspectives at our free webinar ESG in VC funds. CFOs best practices, standards and challenges. See you on the 16th of March 2022 at 4 pm CET.
This free virtual webinar is organized in cooperation with VESTBERRY, VC portfolio management software used by industry-leading fund managers.
About Dilan Mizrakli Landgraff, Co-Founder, Chief Strategy, People & Culture Officer at Antler
As the Co-Founder, she is deeply focused on achieving Antler's mission of fundamentally improving the world by enabling and investing in the world's most exceptional people building the defining companies of tomorrow. To date, Antler has invested in more than 380 companies in over 30 industries including AI, Robotics, drones, fintech, proptech and healthtech. The entrepreneurs Antler works with are the top 1% globally, selected out of more than 50,000 entrepreneurs evaluated every year. Antler’s targets and diversity stats are well above industry average with 70+ nationalities being represented in programs, 36% of portfolio companies having at least one female co-founder, and 45% of Antler leadership being female. Dilan is also heavily active in the ESG space, pioneering the VC industry practice with her recent articles and master classes.
Previously, she was a Senior Investment Professional at Altor Equity Partners, a private equity firm based in the Nordics. Prior to Altor, Dilan spent four years in London with the Investment Banking division of J.P. Morgan where she specialised in M&A and leveraged finance teams.
She is Turkish citizen, and is currently based in Hong Kong. Dilan is also an active board member at various growth stage companies and an alumna of Dartmouth College with Honors in Economics.
