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Sustainable Finance Disclosure

Startuplab follows a pre-seed equity capital investment strategy, where a relatively large number of investments are made in early-stage companies. ESG considerations are incorporated at various stages of the investment process.

Startuplab Ventures AS ("Startuplab") is the manager of the alternative investment fund Startuplab Founders Fund V AS (the "Fund"). It is Startuplab's assessment that the Fund promotes environmental and social characteristics and that companies in which investments will be made follow good governance practices within the meaning of Article 8 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the "SFDR"). Therefore, Startuplab is required to include a sustainability-related product disclosure section on its website, pursuant to Article 10 SFDR and regulatory technical standards set out in Commission Delegated Regulation (EU) 2022/1288 (the "SFDR RTS"). The below paragraphs provide the information required.

Summary

The Fund promotes environmental and social characteristics, but does not have as its objective sustainable investment. The characteristics promoted by the Fund are the application of certain exclusion criteria, application of an ESG criterion in the investment selection, inclusion of sustainability-related clauses in contractual frameworks, and ESG implementation during the holding period in form of monitoring and engagement, all of which are further described below.

All companies in which the Fund invests, shall follow good governance practices. Startuplab employs a multi-faceted approach to assess the governance practices of potential investee companies, aimed at ensuring robust oversight, ethical conduct, and compliance with relevant legal and regulatory requirements. Measures applied to assess governance practices include interviews and engagements, reference checks, document reviews and regulatory compliance checks, all of which are further described below.

100% of the investments of the Fund will be aligned with all of the promoted environmental and social characteristics.

Startuplab will over the course of the Fund's holding period conduct sustainability indicator tracking as part of its annual portfolio survey and reporting, in which portfolio companies will be required to complete an annual ESG questionnaire. Startuplab will measure how the social and environmental characteristics promoted by the Fund are met by assessing the responses to the questionnaire.

The data may be flawed or incomplete due to, e.g., limited access to data, dishonesty or withholding of information among management, directors or staff at the companies assessed or insufficient knowledge and/or experience in relation to the data collected among team members in Startuplab and/or the companies. Estimations are by definition a source of data that suffers from limitations in accuracy.

Startuplab incorporates ESG considerations in its due diligence of potential investments for the Fund. Engagement with portfolio companies is an essential part of Startuplab's investment strategy, especially during the first part of the holding period, as further explained below.

Translations of this summary in accordance with SFDR RTS article 25(2) are attached as Annex I hereto.

No sustainable investment objective

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

The Fund promotes the following environmental and social characteristics:

Exclusion criteria: When screening for potential Fund investments, Startuplab applies an ESG oriented exclusion list, thereby avoiding that the Fund invests in certain industries that Startuplab deems incompatible with the Fund's ESG features. These criteria are non-negotiable, laying the groundwork for every investment decision made. The mechanism consists of both behaviour-based and product-based criteria:

Behaviour-based exclusion criteria: The Fund shall not invest in a company if there is an unacceptable risk that the company could contribute to or be responsible for:

Serious or systematic violations of human rights, such as murder, torture, deprivation of liberty, forced labour, the worst forms of child labour, and other serious or systematic violations of labour rights;
serious violations of the rights of individuals in situations of war or conflict;
sale of weapons to states i) in armed conflicts that use the weapons in ways that represent serious and systematic breaches to international law governing the conflicts, or ii) that is covered by the scheme for state bond exception described in the mandate for the governance of the Norwegian Government Pension Fund Global;
severe environmental damage;
acts or omissions that on an aggregate company level lead to unacceptable levels of greenhouse gas emissions;
gross corruption;
other particularly serious violations of fundamental ethical norms; and/or
other particularly serious violations of business ethics.

Product-based exclusion criteria: The Fund shall not invest in companies that:

develop or manufacture weapons or central weapons components that with normal use deviate from basic human rights principles, including biological weapons, chemical weapons, nuclear weapons, non-detectable fragments, incendiary weapons, blinding laser weapons, anti-personnel mines and cluster munitions;
obtain more than 5 percent of their revenues from coal- or oil sand-based activities (oil sand extraction, coal mining or coal-based power generation), produce more than 10,000 megawatts (MW) of energy from coal power, or extract more than 20 million tons of coal annually. The analysis should be forward-looking and take into consideration factors such as construction of new capacity, or plans that will reduce the share of revenues from coal-based activities or increase the share of renewable energy sources; and/or
produce tobacco, alcohol, non-medical cannabis, gambling services or pornography.

ESG criterion in investment selection: In screening and selecting investments for the Fund, Startuplab applies an ESG investment criterion alongside other criteria such as the company's potential market size and founder team capabilities. The criterion is integrated in the investment memo drafted by Startuplab concerning the potential investment, which feeds into Startuplab's decision of whether to invest in the company. The integration of the ESG criterion results in a small but noticeable advantage in the selection process to so-called impact investment cases. Startuplab defines impact companies as such when the outcomes of their product and/or service lead to a positive environmental or social benefit. This effect should be intentional, demonstrable, quantifiable, and verifiable – within the limitations of what can be achieved with early stage companies that in many cases have not yet generated revenue. Impact companies may include companies aligned with one or more of the UN Sustainable Development Goals (SDGs). Startuplab will monitor the Fund's share of climate or social impact investments, but does not commit to achieving a minimum such share.
Contractual clauses: Startuplab aims to include sustainability clauses in contractual frameworks (such as the Startup's Lead Investment Papers (SLIPs), investment agreements and shareholders' agreements). Such clauses may concern topics such as environmental responsibility, waste reduction, energy efficiency, social equity, ethical labour practices, governance standards, disclosure and reporting requirements, and performance metrics and targets.
ESG implementation during the holding period: Startuplab will over the course of the Fund's holding period conduct sustainability indicator tracking as part of its annual portfolio survey and reporting, in which portfolio companies will be required to complete an annual ESG questionnaire. Startuplab will throughout the holding period, and especially in the early phases, engage with the portfolio companies with the aim to influence them to adopt socially responsible and environmentally aware operations and improve the companies' results on the ESG questionnaire. The engagement may take many forms, including measures such as educational events and assistance with drafting and implementation of ESG policies,

Investment strategy

The investment strategy used to meet the environmental or social characteristics promoted by the Fund

Startuplab follows a pre-seed equity capital investment strategy, where a relatively large number of investments are made in early-stage companies, selected from a large number of potential investments based on a set of investment criteria, such as the company's potential market size and founder team capabilities, and a due diligence process aimed at discovering the alignment between the potential investment and the set of investment criteria. The Fund invests with a long- term perspective, and Startuplab expects the Fund to hold the shareholding achieved through the investments over several years. ESG considerations are incorporated at various stages of the investment process, starting from deal sourcing all the way to exit. The criteria for selecting investments include not just commercial viability but also potential for positive social and environmental impact. In the due diligence process, Startuplab applies an ESG investment criterion alongside the other criteria, evaluating the ESG policies and practices of potential investee companies to ensure they align with Startuplab's sustainability goals. The ESG investment criterion results in a small but noticeable bias in the selection process towards impact investment cases, adds an additional layer of risk mitigation and aligns the Fund's strategy with long-term sustainable development. During the holding period, Startuplab assists the portfolio companies both proactively and upon request. The Fund's ESG strategy is further detailed in the ESG Investment Policy developed by Startuplab.

The policy to assess good governance practices of the investee companies

All companies in which the Fund invests, shall follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance.

As an early stage investor, the Fund will often be the first professional owner its portfolio companies have. It is Startuplab's policy to both ensure that good governance practices relevant to the company’s developmental stage are in place, as well as to lay the foundation for good governance practices as the companies grow and evolve. Startuplab does not take board positions to drive this development, but seeks to monitor and influence the companies in the right direction through regular reporting and associated follow-up actions. An example could be reporting uncovering that a needed policy is not in place and Startuplab's action being to request that such a policy is put in place.

Startuplab employs a multi-faceted approach to assess the governance practices of potential investee companies, aimed at ensuring robust oversight, ethical conduct, and compliance with relevant legal and regulatory requirements. The approach includes the following measures:

Interviews and engagements: Startuplab conducts thorough interviews with the senior management and, where applicable, board members of the potential investments to gain insights into the governance structures, practices, and culture within the organization.
Reference checks: Reference checks are performed that are suitable for identifying any past instances of unethical behavior or other behavioral characteristics that might indicate potential governance issues or risks at the company under assessment. The checks can include contacting previous employers, business partners, and other relevant stakeholders.
Document review: Startuplab reviews the company's key governance documents such as the articles of association and any corporate governance policies to assess the formal governance frameworks in place.
Regulatory compliance check: When applicable, an assessment is conducted to ensure that the potential investee companies are in compliance with applicable local and international governance standards and regulations.

Proportion of investments

Startuplab will apply the investment strategy set out above in relation to all the Fund's potential and completed investments. Accordingly, 100% of the investments of the Fund will be aligned with all of the promoted environmental and social characteristics. The reason why not all investments necessarily will be aligned with all characteristics, is that

All investments will be direct exposures direct exposures in investee entities

Monitoring of environmental or social characteristics

Startuplab will over the course of the Fund's holding period conduct sustainability indicator tracking as part of its annual portfolio survey and reporting. Portfolio companies will be required to complete an annual ESG questionnaire. The annual portfolio survey will also provide the basis for an assessment of whether a company is to be deemed an impact company in accordance with Startuplab's definition for such company's. Startuplab's tracking may be subject to changes and developments as the portfolio companies grow.

The monitoring is internally controlled by Startuplab's board. At this stage, Startuplab has not adopted external mechanisms for the purposes of monitoring the environmental and social characteristics and the sustainability indicators used to measure the attainment of these characteristics.

Methodologies for environmental or social characteristics

Startuplab will measure how the social and environmental characteristics promoted by the Fund are met by way of collecting data from the portfolio companies through the ESG questionnaire and assessing the responses. Where a company's responses differ materially from Startuplab's own perception of the company's performance, Startuplab will further investigate the responses and inquire the company again as necessary.

Data sources and processing

The data used to attain each of the environmental and social characteristics promoted by the Fund is collected from potential and existing portfolio companies, including through the annual ESG questionnaire. In order to ensure data quality, Startuplab's team members make sure they understand the data and ask the data provider for clarifications and/or confirmations if needed. The data is processed by way of review by Startuplab's team members. Some data points may be estimated where such estimations are necessary and appropriate, and there is no maximum proportion of data that may be estimated.

Limitations to methodologies and data

The methodologies described in the sections above rely on data collection from portfolio companies, in the form of both documents and conversations with management, directors and staff. Such information may be flawed or incomplete due to, e.g., limited access to data, dishonesty or withholding of information among management, directors or staff at the companies assessed or insufficient knowledge and/or experience in relation to the data collected among team members in Startuplab and/or the companies. Estimations are by definition a source of data that suffers from limitations in accuracy.

As the environmental and social characteristics promoted by the Fund are the application of and adherence to certain ESG criteria and activities throughout the investment process, these limitations will in itself not affect the attainment of the promoted characteristics.

Due diligence

Startuplab incorporates ESG considerations in its due diligence of potential investments for the Fund. The Fund's investment criteria include not just commercial viability but also potential for positive social and environmental impact. In order to assess the potential investments in light of these criteria, and to ensure that the relevant company aligns with Startuplab's sustainability goals, Startuplab evaluates as part of its due diligence the ESG policies and practices of potential investee companies. This adds an additional layer of risk mitigation and aligns the Fund's strategy with long-term sustainable development.

There are no external or internal controls on the due diligence.

Engagement policies

Engagement with portfolio companies is an essential part of Startuplab's investment strategy. Especially during the first part of the holding period, Startuplab will engage as an advisor to the portfolio companies and be available upon request, as well as conduct follow-up meetings at least quarterly. Every portfolio company has a dedicated contact person at Startuplab. The contact person may highlight issues or challenges in portfolio companies in Startuplab's internal regular portfolio review meetings, which may result in such issues or challenges being addressed through direct engagement with the relevant company.

Startuplab recognizes that its ability to affect the portfolio companies may weaken over time as the companies grow and other investors enter, and thus aims to put in place solid policies and practices in the early phases.

In the event of sustainability-related controversies in investee companies, Startuplab will as a first step discuss the issue internally and then attempt to solve it through dialogue with the relevant company. Should such controversy prove to be great and/or of lasting nature, the issue and the related challenges will be presented to the Startuplab's board. The board will then try to find practicable solutions. There is no policy in place for triggering an exit procedure from an investee company due to sustainability-related controversies alone.

Startuplab Founders Fund V - SFDR Annex II