The Importance of Technical DD & ESG Factors in Venture Investing

  • What is the actual worth of the business?
  • What kind of sales can the business generate?
  • Is the startup equipped to deliver on all of its promises and its potential from a technology standpoint?
  • Scalability check: is the code apt for additional features and external integrations when and as needed?
  • Are there any existing security vulnerabilities or functional gaps, with a potential for malicious hacking or loss of trade secrets/data?
  • Automated testing, which helps to dig deeper and provides a more efficient code analysis report at a faster and cheaper rate with a list of appropriate remedies.
  • Checking front-end and back-end code quality to ensure a user-friendly experience and test the stability of the code, and its capability to handle any security threat.
  • A thorough infrastructure review to ensure best practices are adopted for hardware, software, and processes with documented procedures.
  • Periodic audits to have more opportunities to identify any potentially harmful and sub-optimal issues and implement updated security measures.
  • Environmental Concerns: ESG investment aims to address environmental concerns such as carbon emissions, ecosystems, and human health. Climate change, renewable energy, and pollution prevention are all given top priority.
  • Social Issues: Here we address issues related to inclusion, diversity, working conditions, and workplace health measures. ESG investing boosts employee productivity as well as customer brand awareness and loyalty.
  • Governance: As a result of globalization and social media, companies’ behavior and policies are being examined more closely than ever before. The ESG Governance approach emphasizes subjects such as board responsibility and diversity, shareholder protection, information reporting, and disclosure.

What are the benefits of ESG audit for start-ups?

Agendas of many large firms today are constantly dominated by environmental, social, and governance issues and early-stage start-ups need to embrace similar standards to ensure their long-term sustainability and value creation.

  • Transparency: Investors want clarity on integrating the business model and ESG considerations of the firm. The more transparency a start-up provides its investors, the larger are its chances of winning over the investors’ trust.
  • Consistency: Investors view start-ups that integrate ESG practices as more credible as it demonstrates start-up’s consistency in implementing best practices in their business model.
  • Assurance: ESG Audit ensures that the start-up is ready to take responsibility while also functioning in a manner that is socially and environmentally beneficial.
  • Does the company monitor and annually review the business policies and plans affecting the environment?
  • Does the company communicate the importance of environmental issues to the employees and embedding environmental responsibility?
  • Does the company have policies and procedures in place to protect company-wide data and remedial action plans in case of a security breach?
  • Does the company have practices in place to promote equality in the workplace?
  • Does the company have zero tolerance for all forms of bribery and corruption?
  • Is the Company’s board an independent entity, capable of resolving issues and conflicts of interest without bias?



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TABS Group™

TABS Group™

DaaS (Diligence-as-a-Service) platform providing a holistic & in-depth qualitative evaluation of an early-stage venture. Powered by FSLTD.