We would like to acknowledge Main Sequence, who kindly allowed us to lift their ESG Policy to create our own. This truly speaks to their commitment to ESG and we are very appreciative. 

 

Overview 

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When we think about investing at Flying Fox Ventures (FFV), we are mindful of impact. We genuinely care about the world around us, and specifically believe that Environmental, Social and Governance (ESG) considerations are pivotal for the longevity of our people and our planet. We believe that if we formally integrate ESG into the FFV investment process, then we hold ourselves accountable to making investments for impact, as well as for maximum returns. 

 

The purpose of this policy is to articulate our ideas and approach to implementing ESG considerations in our investment process and our operations. 

 

In essence, we believe that by fully integrating ESG at each stage of our investment process, we can better manage risks and identify opportunities to enhance sustainable, long term returns in the early stage companies in which we invest. We consider ESG issues to be:

• Environmental: How a company safeguards the environment, including sustainability, waste, energy use, conservation and climate impact. 

• Social: How a company manages relationships with and protects key stakeholders. This includes employees, suppliers, customers and the communities in which it operates.

• Governance: How a company’s leadership is composed and how it operates to ensure accurate and transparent reporting, accountability and shareholder rights.

 

We believe that venture capital investing plays a vital role in longevity, and coupled with that creating the next generation of industries that can be engines for sustainability, as well as job creation and economic growth. This is why we have framed our investment capability around six big, global challenges that align well with opportunities for positive ESG initiatives: 

1. Health: A universal healthcare system for all; 

2. Energy: A focus on inexhaustible and widely available energy sources; 

3. Food: Equal access to rich sources of food; 

4. Education: Access to quality and supportive education globally; 

5. Safety: A safe and secure world for all regardless of age, sex, gender, ethnicity, sexual orientation, class; 

6. Industry: The development of industrial processes in a sustainable and advanced way. 

 

As part of our dedication we have also commenced work to acquire our B-Corp certification.

 

Our investment process

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FFV is a new investment model to expand both the number of angel investors and the quantum of angel capital in the Australian market.

 

FFV is designed to optimise education, access, and risk-mitigation. Members of our cohorts: 

• Get hands-on education and content to learn investment fundamentals from leaders in the field, 

• Observe and participate in Due Diligence and Investment Committee mechanisms, 

• Learn how to identify and evaluate opportunities and structure deals that are pro-founder and pro-investor, and 

• Amass a sizable portfolio (a minimum of 10 investments, which helps to mitigate risk given early investments). 

 

Our initial investments are predominantly at early stages (preseed and seed). We are an active owner and aim to help build the companies in which we invest by partnering with the founders and their teams. Our time horizon is long (10+ years) but we offer liquidity events to our investors as and when they arise (which can be as early as 1 year). 

 

ESG is embedded into each step of our investment process, from the earliest conversations with founders, to more formal due diligence, investment committee memos and transaction documentation, then ongoing monitoring and reporting. 

 

• Screening / early engagement: We maintain and update an exclusions list of industries that we won't invest in. Early engagement filters out these exclusions.

• Due diligence: We assign each of our portfolio companies an internal ESG rating before we invest, as outlined below in Table 1. Internal ESG ratings provide a snapshot of ESG risks and opportunities across the portfolio.

• Deal Memos: We include Internal ESG ratings and a descriptive commentary about key considerations in our Deal Memos. 

• Transaction documents: We do ensure that the Terms Sheet includes ESG provisions, and if we are the lead investor, we include our ESG provisions. 

• Portfolio support: We recognise that ESG initiatives ought to be ‘age appropriate’, reflecting the stage and available resources of our portfolio companies. We generally encourage our companies to start incorporating ESG considerations early, even in a small way, and seek to continuously improve. We are currently developing a toolkit to help our companies navigate their ESG journey as they grow and mature.

• Portfolio monitoring: We monitor ESG considerations for our portfolio companies on an ongoing basis in our informal conversations with founders as well as more formal updates. We also make a formal request for ESG data from our portfolio companies every 6 months. 

 

Our own commitment to ESG

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We apply the key principles of our approach to ESG across our investment portfolio to our own business activities, with a goal to continuously improve. Below is a brief overview of our current approach:

 

Environment: We all work from home and are committed to reducing unnecessary travel, and offsetting our flight emissions to reduce climate impact. 

 

Social: We manage our relationships with stakeholders in a safe and sustainable manner. We utilise local suppliers for any goods or services that we need, and support local groups and charities. We are female founded and led and to date, 38% of the companies we have invested in are founded by women. This is in contrast to the national average which in November 2022 was 8%. 

 

Governance: We give our Investors detailed access to our operations and to their portfolio. We host calls between Investors and Founders, and provide our Investors with a Notion page so that they can get a real-time glimpse into what we are working on, and when.

 

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Note: ESG issues aren’t always black and white, often they can be deeply complex and multi-faceted ‘grey’ areas. When we encounter these ‘grey areas’ we tend to find that what matters most is the spirit in which the leadership of a portfolio company comes to the table. 

 

For this reason, we spend a lot of time with the founders of prospective portfolio companies prior to investing so that we can understand their motivations and ensure we are aligned on certain key ESG issues.