As early-stage investors, we evaluate potential investments on their intent to drive meaningful impact across environmental, social, and governance (ESG) factors.
Obvious Ventures (OV) was founded on the belief that startups combining profit and purpose will reimagine huge sectors of the global economy and create enormous long-term value. Our purpose is to support the world positive entrepreneurs building these disruptive solutions.
The potential for meaningful ESG results is inherent in our purpose and our investment themes across Sustainable Systems, Healthy Living, and People Power.
In this ESG policy, we enumerate our core ESG philosophies as well as our tactical approach for ESG evaluation, implementation, and ongoing governance.
Obvious Ventures ESG philosophies:
- Incorporate ESG evaluation in our investment analysis and decision-making processes.
- Consider environmental, public health, safety, and social issues associated with investment prospects as part of our due diligence process.
- Focus on startups with positive environmental and/or social externalities directly associated with their core product or service offering vs. second or third order effects.
- Where applicable, utilize our governance role to provide appropriate oversight on ESG issues across our portfolio.
- Adhere to the highest standards of conduct to avoid negligent or corrupt business practices.
- Comply with applicable national, state, and local labor laws and support the payment of fair wages and benefits.
- Provide clear and transparent communication on portfolio ESG matters to our employees and our limited partners.
Because we invest at the very early stages of startups, we focus our ESG evaluation on intention, meaning the future potential of the products or services that the company in question plans to bring to market. Here are the nine areas of research and focus in our ESG process:
OV acknowledges that climate change is real and is human-made. We seek to fund solutions to this human-made crisis and create a healthier, more sustainable ecosystem for our biodiverse world.
- Greenhouse gas reduction
We evaluate how the company’s products or services will reduce, replace or remove greenhouse gas emissions including carbon dioxide, methane, nitrous oxide, and ozone; this spans a range of climate tech from renewable energy production to carbon capture.
- Resource use reduction
We evaluate how the company reduces the resources required to make/distribute products or services (e.g., efficient or automated manufacturing processes, localized production, higher quality control, material reuse or upcycling, etc.)
- Pollution / toxicity reduction
We evaluate how the company is materially reducing or eliminating pollution and toxic outputs; this spans new manufacturing processes to new material science.
Our work here spans human physical health and wellbeing, mental health, and financial health. We acknowledge the expanding economic divide in the US and seek to create a more fair and inclusive economy by helping individuals and small businesses achieve financial security and career prosperity.
- Improve human physical & mental health
We evaluate how the company is improving peoples’ physical and mental health in ways that drive better health outcomes at lower costs for patients. We also consider improved safety in the work and the home.
- Employee development & job creation
We evaluate how the company’s products or services develop employee skill sets, create new employment opportunities (beyond positions at the company), and/or provide meaningful assistance to small businesses.
- Improve financial security & safety nets
We evaluate how the company is improving access and affordability of essential financial services; this includes financial planning, savings, and lending, as well as safety nets such as insurance.
We believe that diversity, equity, and inclusion are important priorities both in our own firm and in the companies we invest in. We view good governance as crucial to creating and maintaining successful businesses. We utilize our investor role to provide appropriate oversight across our portfolio.
- Team & board diversity
We evaluate both the current level of diversity in the company’s leadership team, as well as their specific plans to increase team and board diversity in the near future.
- All stakeholder inclusion
We evaluate how the company delivers tangible value to all stakeholders including employees, supply chain partners, and the local communities where it operates.
- Investor Oversight
We evaluate the checks and balances provided by investors and board members. Where applicable, we utilize our board role to provide oversight and monitor progress on ESG goals.
At Obvious, we include an ESG Intentionality section in our investment term sheets, that reads as follows:
Obvious is committed to its environmental, social and governance (ESG) goals. In accepting an investment from Obvious, the Company commits to working with Obvious to develop appropriate ESG goals and policies consistent with our dedication to these values and appropriate for the Company.
Our goal is to align with our founders as early as possible in the investment process around a shared goal of integrating ESG practices into the DNA of the startup.
We recommend that the company define an ESG policy and report to the board annually on the progress made towards company ESG goals.