Practica Capital VC gets practical about ESG performance

About Practica Capital

Practica Capital is an early-stage VC fund dedicated to backing Baltic founders. The VC fund has invested exclusively in tech startups in the Baltic States for the last 10 years. The fund mostly invests in seed-stage companies, with follow-up investments in pre-seed and A stages.

Practica Capital currently manages three funds with €52m in assets under management. To date, Practica Capital has made more than 60 investments, including great companies like TransferGo, PVcase, Interactio, Eneba, Ovoko, Trafi, CGtrader, and others.

60+
Investments to date

€52m
AUM

12 
employees

Context

ESG considerations are becoming increasingly important for VC funds. It has been historically shown that companies that show strong ESG performance also offer better ROI for shareholders (source). And due to that, VC funds and their investors are gathering data to measure their portfolio ESG performance. It's a way how a VC firm can significantly reduce their risks. For Practica Capital, the motivation didn't stop there. As Gintas Daniusevičius, Partner and CFO at Practica Capital shared with me during one of our meetings: “We also want to lead by an example in the Baltic market!”

Challenge

Practica Capital team has considered the subject internally for a while already, so when they reached out to me everything was already in place for us to start the work. Their team needed guidance and advice, as well as practical help on developing their ESG policy and Due Diligence checklist. 

The real challenge was to identify the material issues, relevant for their future portfolio companies (Fund 3). On top of that, we had to develop a process that their team could complete on annual basis to evaluate their portfolio company ESG performance and help them improve their score over time.  

Solution

During our two-month collaboration, Impact House became an extension of the Practica Capital team. To reach the goal, Impact House reviewed best practices and standards set out by PRI, as well as gathered examples from the most relevant market-leading investment firms. The policy was developed based on Principles for Responsible Investment as the fund has become an official signatory.

Throughout the collaboration period, we held a check-in call every week and reviewed the documents until they were aligned with Practica Capital team values, PRI principles, and the best ESG management practices. 

Result

The new ESG policy and the Due Diligence checklist is one of the key documents Practica Capital fund will use for fundraising and launching Fund 3. The VC fund will be able to score each company's ESG performance, as well as the fund's total score across environmental, social, and governance metrics the most relevant to their operations. 

Customer testimonial

We involved Impact House to assist us in the process of crafting our ESG policy, Due Diligence Checklist, and ESG post-investment monitoring tool. The collaboration saved us time and enabled us to move forward with our ambition for more responsible investing and impact measurement. I would recommend Kristine for founders in our portfolio and other players in the startup space!

— Gintas Daniusevičius, Partner I CFO at Practica Capital