ESG policy

Angel Invest Fund Management GmbH (“Angel Invest”) is a subsidiary fully owned by Angel Invest GmbH, a holding company. Angel Invest is an alternative investment fund manager within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such publishes the following information on its website in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”) and its supplementing regulatory technical standards (“RTS”).

This document was initially released in March 2021 and was last updated in December 2022.

 

I.Sustainability risk policies statement (Article 3 SFDR)

Angel Invest addresses sustainability risks in our investment decision-making process. ‘Sustainability risk’ means 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. The main concerns we pay attention to are:

 

• Management team diversity;

 

• Governance;

 

• No negative environmental or societal impact of

 

We developed criteria and qualitative standards which define when an investment may present a sustainability risk. Those are:

• Criteria for how we evaluate management teams (evaluation of the attributes of the CEO, how well the team members know each other, how complete the team is);
• Approaches for how we coach management teams post funding (we screen for individuals and teams that we believe have the ability to listen, learn and iterate fast);

 

• Criteria for screening out investments we believe may have a negative societal or environmental impact (there are no standardized criteria that we use).

When evaluating and working with management teams whom we back, there are three possible negative impact scenarios and each of those can affect the returns of our funds.

1. We don’t select teams with a diverse background

 

The risk is that we miss on supporting a company that could result in a highly successful company.

1. We select a management that is insufficiently diverse

 

The risk is that we have allocated capital and time towards a company that is not equipped to deliver the results that are required to deliver a strong return.

1. We select a management team, but don’t support good management and governance within the company

The risk is that a potentially good investment fails.

 

All three scenarios can negatively impact fund performance. An insufficiently competent or diverse team or poorly managed company or one that negatively impacts the environment or society has an increased probability of default. We thus try to select and manage well to reduce these risks.

 

We regularly review our policies to ensure that they address new and emerging risks as well as investors’ concerns.

 

II.Consideration of adverse impacts of investment decisions on sustainability factors (Article 4 SFDR)

Angel Invest does not explicitly consider any adverse impacts of its investment decisions on sustainability factors according to Article 4 SFDR and the RTS. ‘Sustainability factors’ mean environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.

 

The main challenge in obtaining the data from portfolio companies is expected to be that they may not (be able to) provide Angel Invest with the respective data themselves. These portfolio companies are generally very small startups constrained by manpower to perform such tasks.

 

Angel Invest itself is a small company with limited personnel capacity. We make small initial investments. Therefore, we typically take no board, and no board observer seats at our portfolio companies. We are also typically not a major investor, meaning we receive limited reporting from portfolio companies.

 

As a result, our ability to receive, observe or enforce portfolio internal practices or portfolio company reporting of these practices is very limited. Nevertheless, Angel Invest will in the future attempt to obtain the relevant data when they are reported by our portfolio companies as a matter of routine and we may then be in a position to consider the adverse impacts of investment decisions on sustainability factors.

 

 

 

III.Remuneration policies statement (Article 5 SFDR)

Angel Invest as a sub-threshold alternative investment fund manager does not have a remuneration guideline (remuneration policy) in accordance with the requirements of the KAGB in place. Accordingly, sustainability risks are not integrated in such remuneration policy. However, employees, Managing Directors and Partners are generally required to follow our policies. Failure to do so can result in disciplinary measures. Continued disregard of our policies can also result in the termination of the contract of our employees, Managing Directors and Partners.