Sustainability related disclosures
Rockstart Ventures Management B.V. (hereafter “Rockstart”) is considered a financial market participant in accordance with the Sustainable Finance Disclosure Regulation (EU/2019/2088 or SFDR). Financial market participants are required to publish information on their website about the following policies:
Sustainability risk is defined as an environmental, social, or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
Responsible investment and environment, social, and governance (ESG) integration are at the heart of Rockstart’s investment strategy. Rockstart aims to take sustainability risks into account before any investment decision is made, in line with each of its Funds’ targets, investment strategy, and investor mandate. Rockstart also performs due diligence covering qualitative sustainability risks, ensuring that they are incorporated into the assessment and recommendation provided to the investment committee. The investment committee then advises the Fund Manager on the feasibility of the investment based on the relevant Fund’s investment policy and objectives. Our commitment to addressing these risks is expressed in our ESG Policy.
Rockstart used its best effort to take into account the “minimum safeguards” that are:
Rockstart follows the guidelines set by its internal policies:
Rockstart further recognizes the value and importance of investing in companies that drive positive change. As such, sustainability risks are taken into account while Rockstart seeks to invest in companies that are not only financially healthy, but also that, if they continue to grow, directly contribute to solving environmental and socio-economic problems while avoiding harm to direct stakeholders, society, and the environment.
A very important element to consider is the company maturity stage in which Rockstart is active: the Venture Capital (VC) ecosystem. Rockstart invests in early stage companies (from pre-seed to Series B) that can achieve rapid, capital-efficient growth to build businesses of significant value and scale over a relatively short period. It is only as companies scale that they can truly make an impact. These early stage companies come, inherently, with additional challenges, for example:
On the other hand, early stage companies offer a great opportunity. Often, these companies are at the cutting edge of innovation. Their products and services can have a disruptive and enduring impact on our collective efforts to solve some of the world’s most pressing problems, which as Rockstart Fund themes indicate (AgriFood, Energy, and Emerging Tech), are all linked with the UN SDGs.
Furthermore, our founders are acutely alert to the environmental crises (e.g. climate change, energy transition, pollution, natural resources abusive use and mismanagement, biodiversity loss) and to the social megatrends (e.g. demographic changes, inequality, automation, and artificial intelligence). They are passionately committed to finding ways to develop technologies and business models that address challenges pertaining to the natural world (environment) or affecting the lives of humans (social), striving to mitigate risks to our planet and people where possible.
Thematic investment narrows down the investable universe, helping Rockstart focus on high-conviction themes in our society and the state of our planet. Anticipating and taking advantage of the structural shifts and market developments are Rockstart’s main objectives in thematic investing within Agrifood, Energy, and Emerging Tech.
In parallel with its Funds, Rockstart runs acceleration programs. Rockstart is proud that the founders of early stage companies look at Rockstart as a gateway to a healthy and resourceful ecosystem, acknowledging its value in accelerating their business (including ESG) and the value of having a vast network of responsible investors backing them. All summed, the portfolio companies acknowledge these credentials may become a competitive advantage in subsequent financing rounds.
As a result, for every single investment, Rockstart qualitatively weighs ESG factors, meaning Rockstart decides whether to invest or not based, in part, on ESG. These criteria are embedded into our positive screening and empower Rockstart to make better investment decisions, especially as we invest for the long term.
Lastly, Rockstart initiated an ESG program in 2023 dedicated to operationalizing the integration of ESG. The program includes capacity building, ESG integration, and disclosures and reporting parameters. As Rockstart progresses on its journey, it will keep updating this policy.
Rockstart did a qualitative consideration of environmental, social, and governance (ESG) indicators, among other factors, for its investment decisions. The focus included climate and other environment-related indicators, followed by social indicators, employee satisfaction, and respect for human rights. These are, generally, principal adverse impacts (PAI), i.e. potentially harmful impacts of a firm’s investment decision on a range of environmental, social, and governance matters.
Before each investment, Rockstart conducted a screening with both exclusive and inclusive criteria. For the latter, the positive screening is aligned with the three Rockstart investment Thematic Funds:
As per Rockstart’s Sustainability Risk Policy, Rockstart applies a theme-oriented analysis on each portfolio company prior to investing. Furthermore, Rockstart applied its ESG Policy to ensure minimum safeguards with respect to ESG factors.
From 2023, Rockstart classifies its financial products as promoting environmental and/or social objectives (Article 8 SFDR). As our strategy is to invest in and promote early stage companies with a positive environmental or social impact, Rockstart does not expect material adverse effects on wider sustainability factors. Because of the inherent challenges of the early growth stage of the companies Rockstart invests in, and regarding the disproportional burden that would be required for them to report in a structured, timely, and accurate matter, Rockstart determined that it can responsibly and in good conscious require portfolio companies to report from Series A onward.
Rockstart will continue to monitor its Funds as they mature, check when more portfolio companies can report, and if required, adjust the sustainability-related information it reports on.
Rockstart is currently working on minimizing the burden on early stage portfolio companies that are dedicated to purpose-driven activities. Additionally, Rockstart is improving its integration of ESG and Impact considerations into its decision-making process, asset management, and exit strategies. Potential risks in this capacity are not foreseen to be significant.
Confirming our intent to require Rockstart portfolio companies to report on ESG from Series, we collected information on the PAIs and sustainability factors covering the period from 1 January 2022 to 31 December 2022 from qualifying startups in our portfolio.
The information collected will be documented in the Funds’ periodic reports, on a best-efforts basis, as a dry run, but will not be published officially. This is due to the Funds only classifying as Article 8 in 2023. Our inaugural official report will be for the period from 1 January 2023 to 31 December 2023 and will be published before 30 June 2024 in line with SFDR requirements.
Please see below the principal adverse sustainability indicators for all Rockstart funds.
Greenhouse gas emissions
#4 Investments in companies without carbon emission reduction initiatives
Share of investments in investee companies without carbon emission reduction initiatives aimed at aligning with the Paris Agreement
Social and employment matters, respect for human rights, and anti-corruption and anti-bribery matters
#9 lack of human rights policy
Share of investments in entities without a human rights policy
#14 lack of due diligence
Share of investments in entities without a due diligence process to identify, prevent, mitigate and address adverse human rights impacts
Anti- corruption and anti-bribery
#16 cases of insufficient action taken to address breaches of standards of anti-corruption and anti-bribery
Share of investments in investee companies with identified insufficiencies in actions taken to address breaches in procedures and standards of anti-corruption and anti-bribery
Description of the PAI on sustainability factors
1. Description of the PAI on sustainability factors
We will consider the PAI on sustainability factors for the 18 mandatory and 4 additional indicators for our Series A and onwards portfolio companies.
2. Description of the policies to identify and prioritize PAI on sustainability factors
The SFDR requires Rockstart to describe the policies to identify and prioritize PAI on sustainability indicators.
Rockstart ESG Policy, along with each of our Fund investment strategies and investor-client mandates, provided the guidelines on how we assess, identify, and prioritize PAI on sustainability factors.
Furthermore, Rockstart also considers the following steps:
Screening imposes a set of exclusions to restrict exposure to certain sectors that conflict with Rockstart’s worldview.
Rockstart has voluntarily committed to screen investments against an exclusion list to ensure we do not intentionally invest in any startup that currently does, or is likely to in the future, generate their revenue from harmful activities or products. By applying negative screening, Rockstart mitigates the risk of investing in a startup that could harm the environment, society, or market stability. Our exclusion list is based on the IFC Exclusion List together with any reasonable requirements set by our investors that Rockstart agrees to in a Side Letter.
On specific financial products, following the mandate of our investors, Rockstart may also apply exclusionary preference targeting specific companies and/or countries.
Our thematic investment strategy is a key area of Rockstart’s ESG integration, shaping the strategic asset allocation decision-making process and carrying wide-ranging implications to our portfolio construction. Rockstart invests in three themes:
Each Fund also supports a number of UN SDGs, which can be found in the AgriFood, Energy, and Emerging Tech sections of the Rockstart website.
As described above, while performing a positive screening analysis, a qualitative assessment of sustainability risks is considered. From a quantitative perspective, Rockstart’s sustainability risks were due to the very early stage nature of the startups only considered to a limited extent in its initial investment decision-making process. This process is being improved and implemented going forward to ensure Rockstart takes all relevant material ESG considerations, risks, and indicators into account in its investment decision process.
The investment committee takes into account all risks, including sustainability risks as raised during the due diligence process. The fund manager has final discretion over the investments Rockstart makes, which takes into account findings from the due diligence process and advice from the investment committee.
3. Engagement policies
Engagement is the active and purposeful process of dialogue with portfolio companies where Rockstart is seeking to improve portfolio company’s business practices, especially in relation to the management of ESG issues. At Rockstart we take it as a continuum process involving many interactions with the Founders and senior representatives of the portfolio companies.
Rockstart believes engagement is how we can put into effect our stewardship responsibilities.
Engagement helps portfolio companies to understand Rockstart’s (and indirectly our investor clients’) expectations, allowing them to provide relevant information. It also enables companies to explain how their approach to sustainability relates to their broader business strategy.
Engagement also allows Rockstart to work closely with portfolio companies over time on specific ESG issues that Rockstart regards as posing either an opportunity or a downside risk to the business.
There are several moments of engagement as described below:
The vast majority of Rockstart’s initial investments are tied to an acceleration program designed to expose founders to a like-minded ecosystem of entrepreneurs and a global community of mentors, investors, and corporate partners, allowing them not only to be inspired but also to discover and share best practices. In the acceleration process, Rockstart has constant contact with the founders, which proves a unique opportunity to help reinforce and establish a positive culture, values, and behaviors in time for the portfolio companies to scale up.
Startup companies will be asked to answer progress questions quarterly to monitor progress with their business growth and ESG milestones. Rockstart will monitor progress in achieving the milestones as part of the support it offers its startups, which adds to Rockstart’s value creation. Where possible, Rockstart will also receive an observer board seat to remain informed and encourage and influence board decisions that could impact ESG. As a shareholder, Rockstart will make all decisions in line with its sustainability risk policy.
Mindful of the challenges and constraints of the early stage companies it invests in, Rockstart has decided to allow the startups time to familiarize themselves and grow into sustainability terminology, frameworks, and reporting. The portfolio companies are requested to fully report on sustainability from Series A onwards.
Investors will receive an annual report on sustainability topics, in line with the SFDR, which will include PAI on sustainability factors. The report will include the underlying portfolio companies’ performance on the mandatory principal adverse indicators as well as the selected principal adverse indicators (PAI) that Rockstart has decided to report on.
4. References to international standards
Rockstart always uses its best efforts to act in accordance with the Sustainability Risk Policy and will continue to do so in the future.
5. Historical comparison
As the first reference period for the PAI indicators will be 1 January to 31 December 2023, a historical comparison will only be possible for the statement to the period of 1 January to 31 December 2024, to be published by 30 June 2025.
All Rockstart employees receive a remuneration package depending on their position, experience, and competencies in line with the local labor market and cost of living. The total reward consists of a combination of fixed remuneration (salary and benefits) and variable remuneration (including bonus).
Variable remuneration for relevant employees takes into account compliance with all policies and procedures, which will include those relating to the impact of sustainability risks on the investment decision-making process in the future.