ESG Approach & Policy

Our purpose & mission

AlphaQ Venture Capital is forming a new fund-of-fund structure to make investments into well-selected established and emerging venture capital (VC) funds accessible for everyone. Venture capital has demonstrated excess returns compared to all other asset classes over the past years with a growing trend. Despite the growth of VC as an asset class with an investment volume of about 300bn USD annually, it is strongly under-pronounced as compared to more traditional asset classes in which institutional investors usually allocate capital, particularly in Europe. As a consequence, VC does usually not form part of people’s saving schemes. On the other hand, low interest rates continue to materialize and European pension gaps are growing. We wish to turn VC into a building block for private wealth by bundling commitments across a well-diversified portfolio of VC funds promoting ESG.

Need for new ventures to address the innovation challenges of our presence and future

New ventures need to be created at a larger diversity to find solutions to the challenges of our present and our future. In 2021, global sustainable fund assets have reached a volume of USD 4 trillion but “this is just the beginning – the tectonic shift towards sustainable investing is still accelerating” (Larry Fink 2022). Increasingly, capital needs to be allocated to finance innovation across multiple areas including technological, environmental and societal change. In our view, ESG is incremental to building ‘better’ businesses and will be a value driver for future performance.

ESG integration into our investment process in line with our value proposition

We are looking for investors who join us on our mission to bet on a better future, alongside achieving attractive risk-adjusted financial returns. The evaluation and integration of ESG factors into AlphaQ Venture Capital’s investment process is an important long-term value to our portfolio and ultimately our investors. We actively promote ESG through our investment framework, processes and organization. AlphaQ is a UN PRI signatory and will formally report under the PRI from 2024. We will also engage with the PRI across different collaboration formats beyond reporting, such as providing ‘best practices’ and case studies. We undertake to document material ESG factors during our due diligence as well as regular portfolio review, monitoring and reporting. Our ESG policy is subject to regular reviews and updates.

Our contribution to the UN’s SDG’s

Considering the UN’s SDG’s, we believe that our business purpose primarily addresses the goals number 8 (decent work and economic growth), number 10 (reduced inequalities) and number 17 (partnership for the goals). Our objective is to collaborate with established and emerging venture capital fund managers to foster sustainable change and inclusion around the globe. Financing was among others addressed at the UN Conference on Sustainable Development (20 - 22 June 2012), “The Future We Want”. Through the diligent selection of our target funds and close engagement with them, we will be in a position to create an impact across many SDG’s.

Deep Dive: Impact of VC on Humanity and Climate

Venture capital volumes have increased by more than 600% over the last decade bringing up an increasing number of unicorns out of various countries. All of them offer new job opportunities and hence, promote economic growth. We currently live in a time where the availability of capital exceeds the availability of talent. Especially, the younger generation seeks to engage in order to make an impact and through Covid workers started to feel more confident to try new opportunities that are more suited to their skills, interests and personal lives. We believe that in the future innovative impact-driven companies will be more likely to attract and keep talent. Another example to illustrate our engagement on goals 8 and 10, is the emerging markets. Through our network, we have already started to identify the best independent funds to support local start-ups and hence, sustainable economic growth across South-East Asia, Latin America and Africa. We also recognize that the conservation of the natural world is the biggest challenge of our time. Paradigm shifts and sustainable alternatives will mainly emerge through new market players across various sectors. Therefore, it is an integral part of our investment strategy to allocate a considerable proportion of our capital to climate funds. However, sustainable change goes across all industries which is why we will also support generalist and sector-focused funds across life sciences, foodtech, mobility, health / well-being, energy, Web3.0, fintech, SaaS and other sectors under the precondition that they are dedicated and credible to build back better.

ESG is embedded into our organization

Taken together, we aim to use our platform to actively promote our values and ESG considerations through our organization, our investment strategy, processes and fund portfolio. This includes that all our team members participate in the carried interest generated through the fund-of-fund out of which 50% is reinvested in order to strengthen the alignment of our interests with our investors. Everyone on the team is educated and encouraged to be a role model in driving positive real world impact. All of our target funds are asked to have an ESG policy in place. For smaller funds, we might agree to jointly develop a policy as part of our engagement.

European Disclosure Regulation (EU 2019/2088) (Sustainable Finance Disclosure Regulation, "SFDR")

AlphaQ classifies as Art. 6 funds under the UN SFDR. As a fund of funds, AlphaQ cannot always monitor and disclose the material impact of ESG factors in the portfolio and therefore will not follow the requirements of Art. 8 SFRD funds. However, AlphaQ promotes becoming an Art. 6+ fund that focuses on direct impact assessments where appropriate. In addition, it is clearly defined which investment sectors are excluded. For more details on the EU SFDR see here.

ESG Exclusion Criteria

AlphaQ does not invest, guarantee or otherwise provide financial or other support, directly or indirectly, to companies, or other entities whose business activity consists of:

• Coal, unconventional oil & gas, nuclear power
• Arms and weapons
• Tobacco
• Alcohol
• Adult entertainment
• Gambling