At FIRSTPICK, we aim to support the best tech founders across the Baltics while maximizing returns to our fund’s investors.
FIRSTPICK always aims to invest responsibly. To do so, we make sure our approach to investments meets the requirements of [EuVECA](The European Venture Capital Fund,requirement to appoint a depositary.) and follows the best practices set out in the Ten Principles of the United Nations Global Compact and the Six Principles of the United Nations Principles of Responsible Investment. FIRSTPICK considers the positive impact of portfolio companies in accordance with the Sustainable Development Goals of the United Nations. We are committed to strictly avoiding investments directly or indirectly in companies engaged in those sectors set out on the harmonized exclusion list of the European Development Finance Institutions.
This ESG policy sets out our approach to responsible investments and the processes we have set out to encourage portfolio companies to consider and manage ESG risks and opportunities. Our team considers ESG risks (environmental, social, and governance) when investing from FIRSTPICK SEED FUND and FIRSTPICK ACCEL FUND while also following our investment strategy to support the best early-stage founders.
Considering the development of the new EU regulations, this policy should be viewed as an evolving document that will be developed further through a dynamic and collaborative process with founders, LPs, and other players who are an essential part of the funds.
We commit to following this ESG policy within our organization, the funds we manage, and in collaboration with industry partners.
As we recognize the value of responsible investing, we expect our portfolio companies to be aware of the impact their business has on all stakeholders, including their employees, customers, suppliers, shareholders, the environment, and the world at large.
We believe that to make good investments with reduced risk and higher financial returns, our work has to be guided by an understanding of ESG risks and opportunities. We are proud to commit to the following ESG values to encompass that.
As we invest in software companies, the environmental issues are less material to our investments. However, we encourage our portfolio companies to consider employee commutes, business travel, switching to renewable energy sources for powering offices and servers, and efficient data management. We are making sure we don’t invest in any of the Prohibited and high-risk sectors listed later in this policy and following best practices from EuVECA and the UN.
With regard to social sustainability, we are committed to diversity and inclusion in our hiring process (5 out of 8 employees are females!) and encourage the same from our portfolio companies. A company’s responsibility is to provide a healthy, safe, and inclusive work environment and culture in which employees are treated with dignity, decency, and respect. We aim to invest in companies that have a positive social impact on financial and healthcare accessibility.
We are committed to good governance practices in our own operations and expect the same from portfolio companies. Good governance in our context means:
- timely and transparent reporting,
- management accountability for business activities and their impact,
- following high-level accounting practices,
- forming a well-rounded and active board when needed.
We do not just state that we care about ESG and draft policies — ESG is practically taken into account throughout the entire investment process.
We apply proportionality in our work with portfolio companies, taking into consideration their stage, the number of full-time employees, and a broader business context. Fundamentally, understanding ESG risks and identifying business opportunities is the responsibility of the portfolio company board of directors. FIRSTPICK has established the reporting framework and encourages companies to integrate ESG matters in the day-to-day business.
1. Deal screening
- For all companies, we check that the company is not in any way directly or indirectly doing business in our Prohibited and high-risk sectors as stated in this policy,
- For pre-seed and seed-stage companies, we assess the company’s alignment with Sustainable Development Goals.
2. Due diligence
- For pre-seed and seed-stage companies, we request and analyze relevant ESG and impact data using Sustainable Development Goals as the guiding framework. Our internal Due Diligence assessment includes an evaluation of the maturity of ESG-related matter management using an ESG Questionnaire.
3. Deal structuring
- We, together with the company, select at least 1 ESG KPI for reporting on a half-yearly basis. Reporting on the selected ESG KPI(s) is included in the term sheet.
4. Investment management
- We request companies to collect and report data on the selected KPIs on a half-yearly basis,
- We compile impact data across the portfolio into a fund report for our own understanding of the impact of our investments and distribute the insights to our investors,
- We aim to leverage the accelerator program to introduce the topic and educate startups on the value of ESG tracking via informal and formal meetings.
FIRSTPICK doesn’t invest directly or indirectly or otherwise provide financial or other support for enterprises engaged in the following:
1. Those activities specified in Article 1(2-5) of the General Block Exemption Regulation;
2. Investments in restricted sectors set out on the harmonized exclusion list of the European Development Finance Institutions, including:
2.1. Forced labor or child labor;
2.2. Activities or materials deemed illegal under host country laws or regulations or international conventions and agreements or subject to international phase-outs or bans, such as:
2.2.1. Ozone-depleting substances, PCBs (Polychlorinated Biphenyls), and other specific, hazardous pharmaceuticals, pesticides/herbicides, or chemicals;
2.2.2. Wildlife or products regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
2.2.3. Unsustainable fishing methods (e.g., blast fishing and drift net fishing in the marine environment using nets over 2.5 km in length).
2.3. Cross-border trade in waste and waste products, unless compliant with the Basel Convention and the underlying regulations;
2.4. Destruction of High Conservation Value areas;
2.5. Radioactive materials and unbounded asbestos fibers;
2.6. Pornography and/or prostitution;
2.7. Racist and/or anti-democratic media;
2.8. In the event that any of the following products form a substantial part of a project’s primary financed business activities:
2.8.1. Alcoholic Beverages (except beer and wine);
2.8.3. Weapons and munitions;
2.8.4. Gambling, casinos, and equivalent enterprises.
3. Investments in micro and small enterprises whose sectors of activity are restricted under a State Aid Scheme;
4. Any other ineligible expenditure in accordance with Applicable Legal Requirements.
While we recognize the value, we do not currently consider the principal adverse impacts (PAIs) of our investment decisions on sustainability factors as set out under the European Union Sustainable Finance Disclosure Regulation 2019/2088 (“SFDR”).
Considering our fund size and the early stage of invested companies, we conclude that conducting a PAI assessment in accordance with SFDR would take up a disproportionate amount of resources from the main activities both for the companies we invest in and for us. Therefore, we currently don’t intend to consider PAI in our investment decisions. However, we recognize the importance and might do so in the future. FIRSTPICK employee remuneration policy isn’t yet linked to sustainability objectives.
Our contact person for ESG-related issues is Jonė Vaitulevičiūtė. The policy is reviewed and, if needed, amended annually or on demand. This ESG policy has been approved by the FIRSTPICK Partners and is followed by all FIRSTPICK’ers.