Sifted - Let's talk about E-S-G

Good morning there,

Yesterday at one of London’s central schmoozing spots a couple hundred investors — including a surprising number of LPs — turned out for a chin wag on how to get ESG right, and the money that they could make from doing so. After four years reporting on the venture scene, it’s the first time I’ve attended a conference dedicated solely to ESG: a tentatively hopeful sign for where the ecosystem’s headed. Scroll on for the takeaways. 

Elsewhere today:

• The French billionaire quietly upping his investments in French tech (hint: it’s not Xavier Niel)
• 6 things founders should know if they're fundraising this autumn
• Capmont Technology raises €100m fund to back early-stage B2B startups in Europe and the US

P.S. Applications are now open for our France Leaderboard, which will rank the country’s fastest-growing startups by revenue. Founders, if you think you should be on there, or VCs, if you have a portfolio company that you think can make the cut, you/they can apply here.

— Freya Pratty, senior reporter

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🇩🇪 Munich-based VC Capmont Technology has closed its first fund of €100m, to back B2B tech startups across Europe and the US.

• It plans to reserve 40% for follow-ons — however, it has “additional soft commitments from LPs” which allows the fund to make co-investments in addition to those from the fund, especially at the later stages, says Dr Torsten Kreindl, managing partner at Capmont Technology.

🇩🇪 Period and cycle tracking app Clue’s CEO Audrey Tsang is stepping down after six years working in various roles at the startup; she’ll be replaced by the company’s current chief product officer, Rhiannon White. 

• Tsang became co-CEO of the company with Carrie Walter in March 2021; after Walter stepped down in October last year, Tsang continued as sole CEO.
• In a LinkedIn post, Tsang said that she’s expecting her first child and that she wants her daughter to grow up surrounded by family in San Francisco and Stockholm, which would take her away from Berlin. She said her time as CEO was “the most challenging and most fulfilling job of (her) life.”

Let's talk about E-S-G

ESG in VC is — if the FRAME conference in London yesterday is anything to go by — finally a topic worthy of GP and LP attention. 250 movers and shakers met at the UK capital’s ever popular 180 Strand, where heads of impact and ESG leads chatted excitedly about the fact their investment committee and LPs had dedicated a conference trip to the subject matter, something we might not have seen a few short years ago.

Don’t go thinking that means everyone now suddenly loves the acronym — or has worked out precisely how it fits into the venture model. Despite being increasingly focused on climate investments and the ESG agenda, Lightspeed’s Paul Murphy told the conference he’s banned the acronym at the fund, for example.

Likewise, Marie Ekeland, founder of climate-focused fund 2050, said that “ESG is the future of venture” — before adding: “We never talk ESG with our founders.” Instead, she uses the term “alignment methodology,” explaining that 2050 aims to find founders whose mission and beliefs align with the fund’s, and then helps to build a business model where those beliefs are furthered, and not countered, as revenues grow.

The actual nuts and bolts of capturing ESG metrics are still, as one partner termed it, “absolutely painful.” Filling out a survey with your data for each investor — who are all often collecting slightly different metrics — can be a stretch for time-poor early-stage founders. 

There is, however, growing recognition that startups need to get their ESG reporting in shape early on, before they hit a size where mandatory reporting standards come in, and before they want to tap asset managers or debt financiers who’ll want thorough stats. “ESG is a big part of the pre-IPO road show,” one attendee said.

The other reason ESG has risen up the agenda? Because people believe it’ll make them more money. 

“The successful companies of the moment, the companies securing large growth rounds, all have ESG embedded into them,” said Rainer Märkle, GP at HV Capital. 

It’s the environmental part of ESG that’s getting capitalist’s going. The green transition is increasingly termed a trillion dollar opportunity. After all, the richest man in the world runs a climate company, Sarah Kunst of US fund Cleo Capital, reminded the room.

The flip side: investors are realising that not embedding climate change into their thesis could cost them a lot of money. One attendee mentioned doing an accounting exercise to calculate how much of their portfolio’s revenue would be wiped out should a carbon tax be introduced. 

Away from the stage, one attendee brought up a boardroom dispute where a VC wanted to push an ESG focus, while another “just wanted the company to survive the next six months.” Chasing revenue and upping ESG are, sadly, not always aligned.

— Freya Pratty, senior reporter

Freya Pratty writes Sifted's climate tech newsletter, which drops the latest news, analysis and deals from the sector into inboxes every Thursday. Not signed up yet? You can do that here. 

🇫🇷 French billionaire Rodolphe Saadé, the CEO of Marseille-based, family-owned shipping and logistics giant CMA CGM, has been quietly making a mark in French tech for the past two years.

• Although he’s been investing in startups since 2018, Saadé has recently participated in high-profile AI deals — think Mistral, Poolside, Nabla and a €300m Paris-based non-profit AI research lab called Kyutai — often alongside fellow billionaire and established French tech figure Xavier Niel.
• Sifted sat down with Séverine Grégoire, who leads Saadé’s tech investments, to find out more about his strategy. 

🍂 6 things founders should know if they're fundraising this autumn.

🇸🇪 Swedish battery giant Northvolt has had a bumpy time recently. The company last week announced job cuts and the closure of two sites after completing the first part of a strategic review; then things took a further turn this week, as Swedish media reported that it’s in urgent need of fresh capital. Sifted’s Mimi’ Billing asks who could step in.

🇬🇧 Three day work weeks and love for Mondays: The current state of the UK workplace. (Sponsored by Techspace)

🌍 How European tech can compete with China and the US, according to an EIC board member. (Sponsored by European Innovation Council)

Exits look set to return - is your startup ready?

With just 10% of startups having a chance of being acquired after their Series C round, the stakes are high. Our expert guide gives you the tools to navigate the M&A landscape and build a strategy that makes sure no money is left on the table.

Munich, Germany-based DeepDrive, which focuses on building in-house production EV lines and industrialising its patented Dual Rotor motor technology, raised €30m in Series B funding. Leitmotif led the round and was joined by investors including BMW i Ventures, Co-Pace, UVC Partners and Bayern Kapital.

Madrid-based Nomad Solar Energy, which specialises in the manufacturing and commercialisation of off-grid mobile solar generators, raised €15m in funding. Tilt Capital Partners led the round.

Munich, Germany-based Phlair, which specialises in hydrolyzer-based direct air capture tech, raised €14.5m in seed funding. Extantia Capital led the round and was joined by investors including Planet A, Verve Ventures, Atlantic Labs, Counteract, UnternehmerTUM. The funding includes a €2.5m grant from the EIC Accelerator.

Zurich, Switzerland-based Lightium, a photonics startup focused on increasing data centre performance and reducing energy consumption, raised $7m in seed funding. Vsquared Ventures and Lakestar led the round.

Belfast-based Reform RX, which focuses on enhancing pilates personalisation with patented reformers tech, raised $5.1m in funding. Clarendon Fund Managers led the round.

Cardiff-based Alesi Surgical, which has developed tech that removes surgical smoke from the atmosphere and makes surgical procedures safer, raised £5m in funding. Mercia Ventures led the round and was joined by investors including IP Group and Panakès Partners.

Berlin-based Noah Labs, which develops telemonitoring tech for patients with heart failure, raised €3m in seed funding. Nina Capital led the round and was joined by investors including Adesso Ventures, the Foundation of the German Heart Center Berlin and Brandenburg Investment Bank.

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