Website product disclosure

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Summary:

No Such Ventures aims to create value by investing in startups and scaleups. The primary objective of the fund is to achieve an average minimum annual net return of 25%+. Investments are typically made in companies with the potential to more than double their share price within a maximum period of 4-5 years.

 

In addition to its financial goals, No Such Ventures also places a strong emphasis on its Sustainable Development Goals. Namely, SDG 7: Ensure access to affordable, reliable, sustainable, and modern energy for all, and SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.

 

To assess sustainability risks, No Such Ventures relies on the Sustainability Accounting Standards Board (SASB) framework and analyzes investee companies' preparedness for these risks as part of the due diligence process. 

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As standard, the Principal Adverse Impact (PAI) indicators are not considered at the entity level. If a financial product classifies as promoting Environmental and Social (E&S) characteristics (article 8 product) the PAIs are potentially considered. This analysis is done on a deal-by-deal basis. 

 

The fund actively engages with investee companies to enhance their ESG performance through various means, including meetings with management, data requests to investor relations, and formal voting when necessary. Reporting occurs on a monthly, quarterly, and/or yearly basis, with updates on financial returns, financial KPIs, and non-financial KPIs. 

 

No Such Ventures sustainable investment objective:

This financial product (No Such Friends of E.A.Z.) promotes E&S characteristics through supporting the UN Sustainable Development Goals but does not have as its objective sustainable investment. 

 

Environmental or social characteristics of the financial product:

In this regard, this specific financial product invests in a business that is aligned with the following themes

 

1. SDG 7: Ensure access to affordable, reliable, sustainable and modern energy for all

2. SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

 

Additionally, the financial managers of this financial product engage with the business owners it has invested in to include these characteristics in their business strategy.

 

Investment strategy:

At No Such Ventures, we seek promising startups and scaleups with the potential for growth and a positive impact on Sustainable Development Goals. Our investment strategy involves a thorough analysis and assessment of early-stage businesses across diverse sectors. We aim for an average annual net return of 25%+ over the 4-5 years.

 

The "Assessment of good governance practices in investee companies" policy by No Such Ventures aims to promote responsible investing by evaluating potential investee companies' governance. The policy covers criteria such as transparent decision-making, risk management, clear accountability, well-defined management structures, fair employee treatment, transparent remuneration, and tax compliance. 

 

Proportion of investments:

Our commitment extends to allocating 100% of our invested capital, via a direct investment in the company that promotes E&S characteristics through supporting the Sustainable Development Goals. 

 

Monitoring of environmental or social characteristics:

We monitor the alignment of our investments with the SDG and subgoals as defined in the Investment Memorandum prior to investing by the product manager. 

 

Following the initial investment, the E&S characteristics continue to be monitored by the investment team in order to update the initial SDG assessment, identify risks, and carry out engagement with the company on SDG areas identified for improvement. The moment the investment team asks for data consists of informal weekly/monthly meetings, quarterly formal (board) meetings, and specific questions/data requests. 

 

Methodologies for environmental or social characteristics:

We utilize recognized industry-standard methodologies to measure how investments contribute to the E&S characteristics. 

 

• Sustainability Accounting Standards Board (SASB) framework is used to identify and evaluate material sustainability risks. The Materiality Map of the SASB determines which sustainability risks are material to consider in the investment decision-making process. SASB has identified more than 25 sustainability risks divided across the E, S, B (business model innovation), and G topics. Depending on the economic sector the investment is active in, these risks are marked either 1) not material, or 2) material. For a risk to be classified as likely material, SASB has found that for over 50% of the companies active in that sector, the risk has a significant impact on the financial position or operational activities. No Such Ventures will provide an analysis based on policies, practices, and incidents to determine if the investee company has a bad, satisfactory, or good estimated risk score for a specific material sustainability risk.

• For each investment, the investment team identifies the Sustainable Development Goals that the investment by default promotes. The investment team specifies the sub-characteristics associated with these goals and then regularly assess the company's performance against these indicators during their ongoing interactions.

 

More details in Annex II: Pre-Contractual Disclosure Document.

 

Data sources and processing:

At No Such Ventures, we rely on a blend of data sources to determine if there is a fit with our assessments, which include both the Sustainability Risks and the promotion of E&S characteristics by supporting the Sustainable Development Goals. Our data is sourced from publicly available information and shared company information, including financial reports and company policies. At No Such Ventures, we have developed a comprehensive approach, explained below, to collecting and processing data for our assessments fit for early-stage companies that usually lack an abundance of available data.

 

1. Sources of data:

   1. Publicly available information: This includes market insights, competitor data and regulatory documentation.

   2. Company-supplied data: We engage directly with the start-ups and scale-ups we evaluate and invest in, collecting essential data that includes financial reports, policies, and other relevant documentation.

2. Data quality & integrity:

   1. Open communication: A prospective investee company must exhibit a willingness to communicate or share relevant data and insights. This fosters transparency and allows us to carry out a holistic assessment.

   2. Disclosure standards: We emphasize the importance of full disclosure. Any investee company found to be hiding defects or safety issues related to their products will not meet our investment standards.

3. Data processing:

   1. Software tools: We utilize software tools like Excel to streamline data collection and analysis. This enables us to manage vast amounts of information and gain actionable insights efficiently.

   2. Data verification: Part of every due diligence process is the verification on the accuracy of the data received from the company. 

 

Limitations to methodologies and data:

We acknowledge the potential limitations of current methodologies and data sources, especially in a rapidly evolving landscape of reporting standards. We anticipate that these methodologies will evolve alongside the increasing availability of sustainability-related data and industry maturity (refers to the stage of development of an industry). Examples of potential limitations of the current methodologies and data sources are data availability, data consistency, reliability, and accuracy. While we navigate these challenges with the utmost diligence, we believe that as the industry matures, many of these limitations will be addressed. We remain committed to evolving our methodologies and practices to improve our reporting.

 

Due diligence:

Our investment process includes rigorous due diligence, which encompasses sector coverage, investment thesis development, and external audits. We assess startups and scale-ups based on their financial performance, governance practices, and commitment to supporting E&S characteristics. 

 

• Sector coverage: During the investment process, we research and document an overview of the sector in which the company operates. This includes market sizing analysis, a competitor overview, analysis of market trends, and a legal analysis of the impact of rules and regulations.

• Investment thesis development: We develop our own investment thesis based on the expected strategy of the company's management going forward. Throughout the investment's lifespan, we regularly review the thesis to ensure it aligns with the expected trajectory.

• External auditors: Externally, we may collaborate with third-party auditors to assess various aspects of the company.

 

More details in Annex II: Pre-Contractual Disclosure Document.

 

Engagement policies:

We actively engage with our investee startups and scaleups, encouraging them to enhance their non-financial performance. Our engagement activities encompass the following approaches with its investee companies:

1. Monitoring indicators: An indicator to monitor whether an investee company contributes to the social characteristic is that the investee company in which the Fund invests should not only possess strong financials and good management but should also consistently strive to enhance its non-financial performance whenever feasible. Sustainability risk analyses for the Funds' investments are regularly reviewed and updated as needed. Significant changes in the individual sustainability risks of an investment are not expected to occur frequently. Furthermore, the Funds exclude potential investments with a history of poor performance in sector best practices or those lacking sufficient policies or plans to improve their social and environmental impact.

2. Voting and active engagement: As active portfolio managers, we maintain an ongoing dialogue with the companies we invest in, covering a wide range of topics, including environmental and social considerations and other factors affecting their overall investment prospects. Our engagement process begins when we identify concerns through our continuous monitoring and screening efforts. We engage with investee companies through various means, such as:

   1. Meetings and calls with the company's management or Chairperson.

   2. Email communications with investor relations or company representatives to address specific matters.

   3. Conducting on-site visits to the company's facilities for a deeper understanding of their operations.

   4. Seeking insights from external industry experts or other relevant industry participants.

   5. Taking formal voting action when we believe it is necessary to protect our investments or influence positive change within the company.

 

Designated reference benchmark:

No Such Ventures does not measure its ESG performance against a specific benchmark or index.