When you are an investor and you have to decide whether or not to invest in a given company, you pay attention to a lot of things. There are the magical three T’s: team, technology, and traction. Many investors will say that the last T is the most important one: good traction usually indicates product-market fit, and can forgive doubts about team and technology. The criterion that I personally also always find interesting, however, is founder-market fit, sometimes also called product-founder fit: why is this particular team solving this particular problem?
One of the latest investments we have made with Vitosha is an exemplary tale of such fit. One of the already sixteen active VC funds that are based in Sofia is Urban Impact Ventures; a fund with the same Dutch roots as myself, that set up shop in Sofia two years ago, and is investing Europe-wide in companies that provide sustainable technology solutions for urban environments. The fund’s team have decades of experience in impact investing, and have been on the forefront of sustainability implementation in financial transactions. So much so, that one day they thought: why not take the workflow for sustainability tracking and compliance that we use on our own dealflow and portfolio, and productize it as a separate solution for others to use.
Team uIMPACT with the company board of directors including Claudia Marcusson, Nadia Soultanova (Urban Impact Ventures) and Max Gurvits (Vitosha Venture Partners)
And that’s how uIMPACT was born. After spinning out the product from the VC fund,an ambitious founder entered the play to take over and lead the company forward. Today, uIMPACT is a female-only team that consists of Iskra, Claudia, and Mihaela, who are rolling out the measurement and reporting methodology to funds, startups, and investment community solutions that need this kind of solution. And as it turns out, that’s pretty much everyone in the VC space.
Environmental, Social, and Governance (ESG) criteria have been playing an increasing role in the investment world, as factors along which to measure the performance of any given asset according to the criteria that define the contribution of the company in question to a better world and society. But since January of this year, when the European Union adopted the Corporate Sustainability Reporting Directive (CSRD), a process has started that will lead to uniform requirements for all businesses in the EU (or foreign ones that do business in the EU) to file sustainability reports alongside financial statements.
It is clear that tools that analyze, visualize, track, and assist in compliance with ESG criteria are fast becoming a multi-billion euro market, and uIMPACT is entering the play with a strong ambition to take up a sizeable portion of that. What makes uIMPACT special, in the words of CEO Iskra Yovkova, is the solid experience and background that the team has in this novel field. “As new as factoring in ESG compliance is for many business leaders, for us this has been our daily bread-and-butter for years already”, says Iskra. “We have analyzed thousands of companies along these criteria before uIMPACT was even started, and have a steadfast and systematic approach to sorting, analyzing, and making actionable all the possible aspects of this complicated framework”.
The magic behind uIMPACT is not just the experience of the team. Sustainability assessments are like an onion with many layers. While most solutions currently on the market offer high-level and simple analysis of the various criteria, uIMPACT goes much further than its competition. It offers its users the ability to set goals and measure progress towards achieving them, as well as to interlinking the various components, giving investors and founders the insights on how to optimize compliance by synergistically working towards achieving particular business goals that improve sustainability performance. And it’s not just about ESG criteria: uIMPACT is one of the very few solutions that can also track performance along the UN’s Sustainable Development Goals (SDG) criteria, that go above and beyond ESG compliance only.
Today, the Sofia-based team is hard at work with the first twenty clients that are using uIMPACT. They include a number of VC funds, several startups, and one investment management platform. As Iskra says, “the good thing about this market is that sustainability compliance is starting to become a must-have aspect for investment funds to invest. And when that is the case, individual companies that are looking for investment will need tools to measure and report that compliance to their prospective or current investors”. Which means that, if uIMPACT delivers on its promise, the market is definitely there. And for us as investors at Vitosha, that adds the product-market fit to the product-founder fit that we already witnessed. Something that we are very excited about as we wish uIMPACT solid and sustainable growth in the months and years ahead.