Sustainability-related disclosures

Sustainability-related disclosure requirements in the financial services sector pursuant to Regulation (EU) 2019/2088.

Ananda Ventures GmbH (“Ananda”) is a Capital Management Company within the meaning of the German Capital Investment Code. It publishes the following information on its website in accordance with Regulation (EU) 2019/2088 on sustainability-related disclosure requirements in the financial services sector.

Entity-level disclosures

Integration of sustainability-related risks into the investment decision process

For Ananda Ventures GmbH (“Ananda”, an investment’s impact, including sustainability risks, play an important role in their investment decision-making processes.

We have developed criteria and qualitative standards that define when an investment has a positive impact. These criteria also serve to exclude investments that entail sustainability risks. In this way, we ensure that we only invest in Impact Companies.

“Impact Companies” are companies that are focused on generating positive social or environmental value while operating in an inherently sustainable way.

“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.

Prior to each investment, we conduct a multidimensional impact analysis which, in addition to evaluating ESG risks, is also designed to explicitly invest only in impactful companies. To achieve this, we thoroughly examine the output and outcome of each company as well as possible negative effects of each company. We take sustainability aspects into account before the investment itself, as part of the due diligence process, as part of the preparation of the term sheet, which usually contains provisions on diversity & inclusion and sustainability & environmental governance, and throughout the investment period. As an impact investor, our core principle is that sustainable returns are only possible with clear ESG risk management. Accordingly, it is central for us to consider risks in the areas of environment, health, and social issues that affect our investments.

Remuneration policies

As a registered AIFM within the meaning of section 2(4) of the KAGB, Ananda Ventures GmbH does not have, and does not need to have, a remuneration policy in accordance with the requirements of the KAGB.

Transparency of adverse sustainability impacts at entity level – principal adverse impact statement

Ananda considers principal adverse impacts as stated in Table 1 of Annex 1 of the delegated regulation supplementing Regulation (EU) 2019/2088 of investment decisions on sustainability factors on the product level. Ananda does not consider the principal adverse impacts on the entity level.

Product-level disclosures

Ananda Impact Fund IV GmbH & Co. KG

Periodic disclosure 2022 (investor only)

1. Summary

Ananda Impact Fund IV GmbH & Co. KG (“the Fund”) is managed by Ananda Ventures GmbH. The Fund pursues a venture capital strategy and invests in impact companies, i.e. companies with the intention to generate social or environmental impact alongside a financial return.

The Fund has sustainable investments as its objective. Sustainable investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices.

Deutsche Übersetzung

Ananda Impact Fund IV GmbH & Co. KG (“der Fonds”) wird von der Ananda Ventures GmbH verwaltet. Der Fonds verfolgt eine Risikokapitalstrategie und investiert in „Impact Unternehmen“, dies bedeutet Unternehmen mit der Absicht, neben einer finanziellen Rendite, eine soziale oder ökologische Wirkung zu erzielen.

Der Fonds hat nachhaltige Investitionen zum Ziel. Eine nachhaltige Investition ist eine Investition in eine wirtschaftliche Tätigkeit, die zu einem ökologischen oder sozialen Ziel beiträgt, vorausgesetzt, dass die Investition kein ökologisches oder soziales Ziel wesentlich beeinträchtigt und dass die Unternehmen, in die investiert wird, eine gute Unternehmensführung praktizieren.

2. No significant harm to the sustainable investment objective

The Fund will not significantly harm any sustainable investment objective by means of considering principal adverse impacts on sustainability factors in the investment decision process.

To achieve this, the Fund considers sustainability risks early in the investment process and takes the Principal Adverse Impact Indicators (“PAIs”) as stated in Commission Delegated supplementing Regulation (EU) 2019/2088 (“SFDR RTS”) Annex I into account.

The Fund collects all PAIs stated in table 1 of the SFDR RTS. Out of table 2 (“Additional climate and other environment-related indicators”) and table 3 (“Additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters”) the two PAIs “Investments in companies without carbon emission reduction initiatives” and “Lack of anti-corruption and anti-bribery policies” are collected. The PAI indicators are reported on an annual basis.

In addition to the PAIs, a further set of “ESG metrics” is collected. Those metrics especially cover topics such as diversity, unbiased hiring, and mental health which are not to a full extent covered by the PAI indicators but are deemed to be relevant from the Ananda point of view.

With regards to ESG, Ananda commits to consider material ESG issues during the pre- and post-investment phase. Therefore, ESG factors are integrated alongside the impact assessment as part of the investment process at Ananda.

As a responsible investor, the Fund strives to ensure that good governance practices are in place and adhered to during and after investment. This includes the portfolio company’s compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

Additionally, the Fund does not invest, guarantee or otherwise provide financial or other support, directly or indirectly, to companies or other entities:

whose business activity consists of an illegal economic activity (i.e. any production, trade or other activity, which is illegal under the laws or regulations applicable to the Fund or the relevant company or entity, including without limitation, human cloning for reproduction purposes); or which substantially focus on:
the production of and trade in tobacco and distilled alcoholic beverages and related products;
the financing of the production of and trade in weapons and ammunition of any kind, it being understood that this restriction does not apply to the extent such activities are part of or accessory to explicit European Union policies;
casinos and equivalent enterprises;
the research, development or technical applications relating to electronic data programs or solutions, which (1) aim specifically at supporting any activity referred above; internet gambling and online casinos; or pornography, or (2) are intended to enable to illegally enter into electronic data networks or download electronic data.
Fossil fuel-based energy production and related activities, as follows (1) Coal mining, processing, transport and storage; (2) Oil exploration & production, refining, transport, distribution and storage; (3) Natural gas exploration & production, liquefaction, regasification, transport, distribution and storage; (4) Electric power generation exceeding the Emissions Performance Standard (i.e. 250 grams of CO2e per kWh of electricity), applicable to fossil fuel-fired power and cogeneration plants, geothermal and hydropower plants with large reservoirs.
Energy-intensive and/or high CO2-emitting industries, as follows (1) Manufacture of organic and inorganic basic chemicals, (2) Manufacture of fertilisers and nitrogen compounds, (3) Manufacture of plastics in primary forms, (4) Manufacture of cement, (5) Manufacture of basic iron and steel and of ferro-alloys, (6) Manufacture of tubes, pipes, hollow profiles and related fittings, of steel, (7) Manufacture of other products of first processing of steel, (8) Aluminium production, (9) Manufacture of aircraft and related machinery, (10) Air transport, airports and service activities incidental to air transportation.

3. Sustainable investment objective of the financial product

Ananda has defined four core “impact areas” of sustainable investments.

Sustainability transformation: Re-imagining whole industries to reach a clean, carbon-neutral and waste-free future within the Planetary Boundaries. Enabling the broadest possibilities and best quality of life for future generations.
Redefining healthcare: Providing fast, accessible, and improved personalised healthcare outcomes for all. Using novel technologies to advance treatment options and solve structural inefficiencies.
Educational empowerment: Levelling the playing field through accessible and affordable educational technology and quality education as well as shaping the future of work (e.g., supporting families through affordable childcare and lifelong skills).
Equitable humanity: Every life deserves the opportunity to be their best self from cradle to grave. Rethinking every aspect of our daily lives from fair finance to employment and the promotion of a more equal, inclusive and peaceful society.

The Fund contributes to the objectives of creating positive impact by building, holding, and managing a portfolio of investments in portfolio companies whose business success is directly linked to positive change, e.g. by contributing to one of the four above-mentioned objectives. This impact needs to be clearly measurable and inherently baked into the business model of the portfolio companies.

4. Investment strategy

The Fund invests in securities issued directly or indirectly by portfolio companies. The portfolio companies are typically in anyone of the following stages:

(i) Pre-seed / seed

(ii) Start-up

(iii) Growth and expansion, including expansion through, when necessary, financing for acquisition of a business, replacement / transition capital for growth (excluding strategies intended for asset stripping).

The Fund supports high-growth companies whose products and services have ideally already passed the proof-of-concept stage. Ideally, positive feedback from the target market and an existing client base should already be in place. Another type of investee that the Funds likes to support are companies that have successfully built their market presence and require more capital to fuel additional growth. The Fund particularly likes to invest in tech-driven or technology-enabled organisations as tech helps organisations to grow faster, which leads to a more scalable impact and financial performance. As a pan-European Fund, it prefers teams who have the ability to transfer their business models across borders as social issues in European countries are often comparable and solvable through the outstanding solutions our portfolio companies provide.

Investment decisions are subject to a structured selection process with clearly defined investment criteria, particularly regarding the social impact and economic viability of a business model.

The Fund seeks to invest in enterprises where the social or environmental impact of the organisation’s activities is tightly integrated into the enterprise’s business model. In other words, the activities carried out by the enterprise must be inherently socially or environmentally impactful. The more revenue, the more impact.

Additionally, the Fund’s goal is to ensure the best possible good governance of its portfolio companies. Ananda usually also takes board seats and are active members for the good of the portfolio company and the Fund.

To find out more about our investment strategy refer to our Website and Manifesto:

5. Proportion of investments

The intention is that 100% of the investments made by the Fund shall be aligned with the sustainable investment objective.

6. Monitoring of sustainable investment objective

At or prior to the time of an investment in a portfolio company Ananda defines one to maximum five environmental/social impact goals (“Impact Goals”). The Impact Goal(s) reflect the environmental/social purpose of the portfolio company and its “Theory of Change” pursued in the portfolio company’s environmental/social mission; “Theory of Change” is a model that specifies the desired outcomes of an activity, project or programme, evidencing the underlying logic of causality between action and result, and making transparent its assumptions, influences, and the potential risks of producing undesired effects, which shall be taken into account when establishing the level of desired outcomes achieved.

For each Impact Goal, one target value reflecting the ambition in proving the realization of the portfolio company’s Theory of Change, during the holding period of the investment, is defined. This Impact Goal is measured, monitored, and revised on a yearly basis. Ananda’s Impact Advisors and Advisory Board provide an independent outside view and expertise in our assessment.

An example, an Impact Goal of the portfolio company “Resourcify” is “Waste under Management.” For more information on our impact assessment and more examples of Impact Goals please refer to our Impact Report: https://impact2022.ananda.vc

7. Methodologies

In order to quantify the attainment of the sustainable investment the KPI of each Impact Goal (“Impact KPI”) is collected at least on an annual basis and benchmarked against the respective target value of each Impact Goal. The impact performance is then calculated on three different levels: Impact Goal, company’s impact multiple and overall portfolio multiple.

8. Data sources and processing

The Impact KPIs and PAIs are collected at least on an annual basis from each portfolio company. The Fund uses reasonable efforts to quality check and pressure test the collected data. The goal is to use objective and quantitative data. However, some metrics may rely – to a certain extent- on estimations.

9. Limitations to methodologies and data

In general, the Fund relies on data collected from the portfolio companies to measure attainment of its sustainable objective. Some limitations may arise from the stage of the portfolio company. When the company is in an early stage, data to evaluate the impact potential might be limited or needs to be based on certain assumptions. In the event of a strategic pivot of the portfolio company, the impact KPIs or Impact Goals may also need to be adjusted. The adjustment follows the same process as for the initial determination. Furthermore, the Fund invests in novel or nascent technologies. In these cases, established methodologies or historical data to quantify the positive impact may not be existent.

The Fund will approach these methodological and data limitations by capitalizing on its 10+ year of experience in impact measurement as well as continuously improving the existing and developing new standards. Furthermore, the Fund actively works together with impact advisors who provide an independent outside view on potential limitations. All this assures that the limitations do not affect the attainment of the sustainable investment objective.

10. Due diligence

The Impact Assessment is a key component of any due diligence (pre-investment) at the Fund. The Impact Assessment follows a clear process. It is incorporated at the first touch point (“Screening Phase”) between the Fund and the potential portfolio company (“Target Company”) and gets progressively more detailed and comprehensive throughout the Due Diligence process.

During the initial assessment (i.e. after reviewing the pitch deck and before and/or after the first call with the founders of the Target Company), critical knock-out points related to impact are assessed. These include (among others) the following aspects:

Relevance: The solution has the potential to significantly improve a relevant problem in a way that would not have occurred otherwise (“additionality”).
Impact Business Model: The impact needs to be clearly measurable and inherently baked into the business model. The impact vision of founders and investors is fully aligned.
Scalability: The impact is scalable as the business model: the more revenue, the more impact is generated in lockstep.
Risk: The analysis of negative externalities is a vital building block. Risk events are assessed, and mitigating strategies are put in place where necessary

When the Due Diligence process continues (“Light Due Diligence”), potential knock-out points related to impact are further assessed with the help of an internal-built Impact Assessment Tool. The tool supports a detailed impact summary (incl. systemic impact of a company) and impact risk management. In addition, the Impact Assessment Tools helps to define the Target Company’s Theory of Change and to set the Impact KPIs in a structured way.

During the last phase of the Due Diligence (“Deep Due Diligence”), the team works towards a structured documentation of the potential impact, Theory of Change, Impact KPIs, and impact risks.

The impact process is accompanied by experienced members of the investment team. If necessary, an external impact advisor is consulted. The result of the impact assessment is an important part of the investment decision by the investment committee.

11. Engagement policies

The Fund will work through appropriate governance structures (e.g., board of directors) with portfolio companies with respect to environmental, public health, safety, and social issues, with the goal of improving performance and minimizing adverse impacts. The goal is to not only measure impact and ESG related topics but to actively engage with and motivate the portfolio companies on that regard. For this reason, Ananda requires that all investees sign certain impact requirements in a term sheet at point of first investment that typically includes clauses on (among others):

Sustainability: Our portfolio companies are committed to reducing their environmental footprint (GHG emissions).
Founder Health: The Fund seeks to support the mental health of portfolio company founders by helping them set up HR assessments and coaching. Read more about this topic here: https://medium.com/ananda-impact-ventures/are-you-founder-friendly-or-founder-aligned-9e92136fd0d3
Diversity, Equity, and Inclusion: The Fund’s portfolio companies are encouraged to become category leaders in team diversity.

12. Attainment of the sustainable investment objective.

Not applicable. A reference benchmark for attaining the sustainable investment objective has not been designated for the Fund.

Ananda Impact Fund III GmbH & Co. KG

Periodic disclosure 2022 (investor only)

1. Summary

Ananda Impact Fund III GmbH & Co. KG (“the Fund”) is managed by Ananda Ventures GmbH. The Fund pursues a venture capital strategy and invests in impact companies, i.e. companies with the intention to generate social or environmental impact alongside a financial return.

The Fund has sustainable investments as its objective. Sustainable investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices.

Deutsche Übersetzung

Ananda Impact Fund III GmbH & Co. KG (“der Fonds”) wird von der Ananda Ventures GmbH verwaltet. Der Fonds verfolgt eine Risikokapitalstrategie und investiert in „Impact Unternehmen“, dies bedeutet Unternehmen mit der Absicht, neben einer finanziellen Rendite, eine soziale oder ökologische Wirkung zu erzielen.