Amasia, a thesis-driven, global early-stage venture capital firm focused on sustainability and climate, has created a robust impact assessment framework to evaluate and manage the climate impact of investee companies. The framework was crafted in collaboration with Malk Partners, a preeminent advisor to private market investors on ESG and impact, who will continue to advise the VC firm on impact. Amasia focused its framework on impact that supports its investment thesis around behavior change for sustainability but believes that it may also help other early-stage VC firms assess impact.
Climate change continues to be a focus among entrepreneurs, with startups tackling the climate crisis continuing to ink deals at a record pace. In the first half of 2022, impact startups raised US$24.4 billion globally, while startups tackling climate change raised US$13.3 billion. While more regulators are requiring companies to disclose their climate impact and risks, there is still a lack of a universal sustainability reporting standard. This poses an obstacle to maximizing positive environmental impact, as impact management starts with having a shared language for impact which can be understood by companies and other stakeholders.
For early-stage startups and investors in particular, impact assessment and management is a new concept. While Amasia’s framework leverages principles from existing models for impact assessment such as the Impact Measurement Project (IMP) and IRIS+ by the Global Impact Investing Network (GIIN), it specifically focuses on early-stage companies and climate impact supporting Amasia’s investment thesis.
“At Amasia, our investment theses – first global expansion and best practices and now climate and sustainability – have led us to back companies that drive positive impact on our world. For our portfolio companies, impact is core to their business, and therefore managing impact is directly tied to their financial success. In the absence of a definitive framework, we have built our own impact assessment framework alongside experts at Malk Partners,” said Ramanan Raghavendran, Managing Partner of Amasia.
The core of Amasia’s framework is the Impact Screen, which evaluates every potential investee company and measures impact potential on a three-point scale across five qualities of impact – Positive Impact, Intentionality, Scale of Impact, Depth of Impact, and Additionality. Scores for each quality help the investor understand the company’s strengths and weaknesses in impact, alongside other business factors, to decide whether to move forward with the investment.
“Malk Partners is the preeminent advisor to private market investors on ESG management and impact investing. We are delighted to partner with Amasia to launch their impact assessment framework and to inspire other VCs to create similar frameworks. We believe that a right-sized analysis is key to helping early-stage companies maximize, manage and measure their impact potential, and to proactively mitigate material ESG risks as they scale. Malk is excited by the growth and adoption of ESG management in the venture industry,” added Max Hong, CEO of Malk Partners.
Amasia believes that the world is evolving to a state where doing good does not imply sacrificing economic returns, and the firm will continue to refine its approach to capturing impact.
