Portfolio Analysis: an ESG Lens

Establishing a baseline and sharing practical-yet-inspiring actions.

by Molly Hoffmeyer

Startups evolve fast, and it can be easy to for founders to overlook the importance of ESG principles in the early days. Yet to stay competitive in today’s landscape, it’s becoming increasingly important for startups to establish and practice ESG-friendly values from the get-go.

As venture investors, our role in the ecosystem has an impact when we invest in companies and founders who adopt ESG principles in their values, goals, and actions. At SixThirty, we invest in founders who create an environment where people want to work, where employees feel included, and where their diversity is welcomed and celebrated. We focus on startups that place security at the core of their business, and who operate with strong administrative and environmentally focused principles in place.

Therefore, we were gratified to find that the results of our first ever ESG-survey show that not only do SixThirty startups move the needle, but they take their role as leaders in ESG seriously.

We surveyed 35 startups in our portfolio: 22 in the Americas, 11 in EMEA, and 2 based in Asia. Here’s a breakdown of what we discovered:

Diversity & Inclusion: For startups, fostering a diverse and inclusive environment from the start can give them a leg-up on the competition as they grow and scale. 51% of the companies have a female or diverse founder, and 60% have a woman or minority on their board. However, only 11% of companies reported >50% of company ownership is held by women and minorities combined.

People & Culture: For founders, it’s not just about building a great company, but a company where great people want to work. More 60% of companies offer paternity or maternity benefits, and of those companies who do offer benefits, half have the same benefit for paternity leave as maternity leave. In addition, 70% offer ongoing education and coaching opportunities

Governance & Independence: Putting good governance in place early in the life of a company can seem like a distraction when a founder is just itching to get started. However, building out strong policies and practices positions a founder for success in the future, and sends a strong signal to the market, customers and investors. Among SixThirty portfolio companies, 63% have an independent board member, 83% have an independent auditor or accountant, and 77% have a non-discrimination policy.

Privacy & Cybersecurity: There is a deficiency among startups around cyber risk management, and many investors are now realizing that cyber risk across the portfolio is a topic that requires focus in order to protect their investments. With GDPR in Europe and CCPA in California, protecting sensitive data has become a paramount concern for every startup. We take our role to support founders on their cybersecurity and privacy journeys seriously, and our CISO-in-Residence program provides unique resources to company founders. Our survey found that 80% of companies use an IT security management system, and 100% have processes in place to protect sensitive data.

Environmental Stewardship: For startups, environmental stewardship can begin with multiple small actions and initiatives that add up to make a large impact for the future. As work has shifted during the past two years from being office-focused to remote-first, companies must now focus on new ways to implement environmental initiatives. One way that companies are showing environmental leadership is through carbon usage offsets. Today 13% of companies surveyed offset their carbon usage, and all companies that do have founders of European origin. We see this as an opportunity for more portfolio companies to implement in the future.

Conclusions and Actionable Insights for all Startups: We are encouraged by these results, there is much room for improvement and continued growth. Focusing on small practical-yet-inspiring actions can lead to large outcomes, and we are confident in our portfolios ability to continue to expand upon their ESG initiatives.

Here are some steps that founders can take across E, S & G:

1. Sharing Norms

2. Goal Setting for Success

3. Security Management

4. Carbon Offsets

5. Encourage Recycling

6. Act Now

We look forward to continuing to make progress on the impact of our portfolio across environmental, social and governance initiatives in the coming years. For more information on our initial report findings, please contact: molly@sixthirty.co .

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STL #venture firm investing in the most innovative ideas across globe. #fintech #insurtech #digitalhealth #cybersecurity

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SixThirty

STL #venture firm investing in the most innovative ideas across globe. #fintech #insurtech #digitalhealth #cybersecurity