We are committed to complying with applicable data protection law and following best practise data guidelines to safeguard all data that we collect, process and hold. For these purposes, “Data” means any information which relates to an identified or identifiable person. If at any time you have a query about how your Data is used, please contact hello@kaya.vc 

Please note Fund specific privacy notices for existing investors in our Funds have been distributed directly to the nominated contact of each investor.

At KAYA VC, we believe passionately in supporting founders who are building the breakout businesses of tomorrow. They have the potential to shape their industries and, in doing so, improve the way we live, interact, and consume. Throughout our 12-plus year history, over which time we’ve backed 50+ companies, we’ve remained steadfast in our mission to back talent from a region that’s often been overlooked by the capital markets. 

We encourage our portfolio companies, although very early in their journeys, to start thinking about how to build a sustainable and durable business from our first investment. We believe strongly that the true way to build an impactful company that diverse talent will want to be a part of and that contributes positively to the world is to embed these practices from the earliest stage.

At KAYA VC, we use the term ‘ESG’ to describe a comprehensive set of environmental, social and governance matters impacting both our fund and our portfolio. These concerns are integral to our returns-driven investment strategy and this document codifies and describes our aspirations explicitly. 

ESG issues were first mentioned in the 2006 United Nations Principles for Responsible Investment (PRI). It stands for:

• Environmental. Impact on and conservation of the natural world
• Social. Consideration of people & relationships
• Governance. Standards for running a company

ESG to us means building companies that are ethical, responsible, and sustainable in the way they operate. This ties to one of our five core values of fostering wholesomeness. While a plethora of detailed frameworks and definitions of ESG exist, most are not fit for usage in venture capital and for working with early stage technology startups. We are hence following the definition of ESG developed with and by VentureESG which defines ESG across eight (8) issue areas linked to E, S and G respectively.

•   Environmental

1. ( 1 ) GHG Footprint and Mitigation. Considering the environmental impact from Scope (directly caused by the company/VC, e.g. through facilities) and Scope 2 (indirectly caused, e.g. energy, electricity, waste) to Scope 3 (caused by upstream and downstream activities, e.g. business travel, transportation of the product, customers’ energy usage); targeting both measuring but most importantly reducing the impact across all scopes (at fund and portfolio level)

•   Social

2. ( 2 ) Employee/ Contractor Wellbeing. Building a strong culture and being a conscientious organization (e.g. offering considerate parental leave)
3. ( 3 ) Diversity, Equity, Inclusion (DEI). Integrating DEI practices across all areas of our business (e.g. diversity of the fund or the founding teams, inclusive hiring practices)
4. ( 4 ) Responsible Technology & Product Design (incl. use of AI). Designing and building products with consideration of the ethical implications on the end-user and society
5. Supply chain. Working towards an ethical and environmentally resilient supply chain

•   Governance

6. ( 6 ) Legal, Compliance and Ethics. Legal and regulatory. Being on top of and aligned to the latest laws, regulations and compliance standards (e.g. GDPR (and equivalent), UN Guiding Principles of Business and Human Rights, the eight core ILO conventions)
7. ( 7 ) Data Privacy and Security. Instilling a strong culture of trust, responsibility and best practice (e.g. with internal systems) around data
8. ( 8 ) Board/ Governance effectiveness. Having appropriate governance structures in place, according to the company’s stage (e.g. board structure, share structure); writing out a code of conduct (committing the company to high ethical standards)

Applying ESG principles is not only based on a comprehensive set of considerations specific to us as an investor and the startups we invest in; we also think through how ESG applies to the entire investment process from sourcing and screening to due diligence and portfolio management and exit.

1. Exclusion list

There are certain business models and sectors we do not invest in which include companies engaged in the production or trade:

• of products or services deemed illegal under host country laws or regulations or international conventions and agreements
• of 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  
• produce/ trade in tobacco (and other addictive substances like liquor), pesticides/herbicides (subject to international phase outs/ bans), sex work, pornography, gambling or casinos, as well as companies where more than five percent of total sales come from the distribution of these products
• produce/ are involved in unconventional extraction of fossil fuels, such as oil sands and deep-sea drilling in particularly sensitive areas. To the extent certain technologies significantly decrease the negative impact of fossil fuel supply chain, it wouldn’t constitute excluded business  
• research activity aimed at human cloning

We will also exclude companies who / whose:

• founder / member of the senior team is involved or has in the past been involved in cases of harassment, discrimination or bullying
• do not comply with international standards and conventions regarding human rights, the environment, anti-corruption or labour laws
• product / service / business model is rooted in/ reliant on exploitative tactics, either of a certain demographic or an at-risk group
• founded in non-cooperative jurisdictions (classified as non-compliant by the OECD)

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2. Sourcing

We are committed to ensuring accessibility and diversity as core principles in the sourcing and pipeline management of our deals. Concretely, we have put in place three mechanisms and steps to make our funnel easier to access and to counteract any lack of diversity that early in the investment process:

• Open application process: to counteract the need for ‘warm introduction’, we have installed a simple form on our website for founders to send us their pitch documentation. All applications are screened by at least one member of the investment team
• Partnerships with universities (MFF UK in Prague, for example) and open invitation events in key cities (Prague, Warsaw, London, etc.)  
• Usage of accessible language: On our website as well as in all communication, we are careful to use accessible language (e.g. gender inclusive)

3. Due diligence / qualitative assessment of investments

In the process of screening and conducting due diligence on potential investment targets, ESG considerations play an integral role. We aim to understand the attitude of the founders, their approach to building their companies and any consideration of adverse impacts they might foresee early in the process and have our investment decisions influenced by these factors. The information we collect is documented in our investment memos and contribute to our investment process and decision making. We are using the following questions in particular at this stage to probe the startups and founding team’s thinking around ESG.

• ESG screening checklist (understanding the company’s capacity):

o   What is the founding team’s approach to ESG?

o   Is the founding team’s vision for their business congruent with ESG principles?

o   What is the extent they have considered potential adverse impacts of their business?

• ESG due diligence checklist (our independent assessment):

o   Are there any obvious red flags (e.g. non-compliance, ESG risks)?

o   How could ESG considerations impact the viability of the business model?

o   Goal: more detailed ESG assessment with relevant DD questions if feasible

• Consulting external sector-specific experts if required (e.g. around data security)
• ESG commitments post-investment: we will ask the founder team to commit to ESG policies and procedures post-investment (including through an on-boarding workshop) with regular milestone reporting

4. Post-investment portfolio support

Once we have committed to invest in a company, ESG considerations will further guide our portfolio management with a focus on both risk mitigation and value creation. We continue our approach to ESG across the eight core areas supporting our portfolio actively in their journey.

• On-boarding workshop: modelled on and harmonised with the due diligence finding, our on-boarding workshop for every new portfolio company includes an ESG framework exercise to identify their blind spots and company priorities based on stage/ sector/ region (from both a risk and strategic value perspective). The outcome of this initial workshop is to agree on reporting metrics covering the eight ESG areas, set goals for improvements and set out a plan of action and support requirements
• Regular milestone meeting(s): while providing ongoing portfolio support, also specifically around matters of ESG, regular ESG-focused milestone meetings conducted every 12 months (or at a point of a significant product pivot/ business model change) will ensure progress. For these meetings, the agreed upon milestones will be reviewed and adapted if necessary as well as new support requirements set

5. Follow-on funding‍

We believe that making ESG part of our financial decision making is integral, so receiving follow-on funding at our fund is not only based on commercial milestones but also ESG assessment 

6. Exit

In the case of exiting (via sale, M&A or IPO) we will consider possible ESG factors, too. Advising founders on the right time to exit and the right partners to work with are important. Similarly, making sure that the exit process is prepared with ESG principles in mind is crucial to us also to avoid ESG-related roadblocks

Applying ESG principles is not only based on a comprehensive set of considerations specific to us as an investor and the startups we invest in; we also think through how ESG applies to the entire investment process from sourcing and screening to due diligence and portfolio management and exit.

ESG does not only apply to how we invest and help our portfolio companies flourish and grow but it is also part of how we internally manage our fund. We aim at applying equivalent ESG considerations and standards we measure our portfolio with to ourselves; being in a strong position when it comes to ESG ourselves not only makes our demands to portfolio companies more believable, it also strengthens our (economic and structural) position as a VC firm.

• ESG responsibility: while every member of our team is concerned with ESG when making decisions and supporting portfolio companies, we have assigned the overall responsibility for ESG to Martin Rajcan (martin.rajcan@kaya.vc). Our approach to ESG will be discussed regularly in our partner meetings (at least once a year) and any material issues will be brought up during our Quarterly Portfolio Review session, or sooner as needed   
• Hiring and working environment: we are committed to hiring a diverse team and providing an inclusive working environment.
• Good governance: all of our decision-making in both the LP Advisory Committee  and the investment committee is committed to good governance principles
  

Our fund is part of the international VentureESG initiative and community, a group of over 150 VC funds between the US, Europe and Israel driving the industry towards more consideration of ESG principles. We intend to further contribute to this development by both embodying the ESG principles set out in this policy in our fund and helping our portfolio to do the same. We aim to work towards a global ESG ecosystem by sharing and encouraging our practices across the VC landscape.

In addition, we were the founding sponsors of Included VC who are working hard on driving diversity and inclusion in Venture Capital.