SFDR
Disclosures Pursuant to Regulation (EU) 2019/2088
Basic Ventures Management GmbH (“Basic Ventures”), LEI: 52990078CS5HSCRHAX07, is an alternative investment fund manager within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, “KAGB“) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure requirements in the financial services sector (“SFDR”).
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Article 3 SFDR –Sustainability Risk Policies Statement
Basic Ventures addresses sustainability risks in its investment decision-making process insofar as relevant. “Sustainability risk” means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment. During the due diligence on potential investments, Basic Ventures conducts a careful analysis of the investment's exposure to environmental, social, and governance risks that could impact its value. When identifying a sustainability risk during the due diligence on potential investments, Basic Ventures decides in light of the specific situation taking due account of the proportionality principle whether it gives up on the investment or proceeds with the investment alongside appropriate measures to mitigate the relevant sustainability risk. Basic Ventures regularly reviews its policies to ensure that they address new and emerging risks as well as investors’ concerns.
Article 4 SFDR – No Consideration of Adverse Impacts of Investment Decisions on Sustainability Factors
Basic Ventures does not consider principal adverse impacts (“PAI”) of investment decisions on sustainability factors. “Sustainability factors” mean environmental, social, and employee matters, respect for human rights, anti-corruption, and anti-bribery matters. Basic Ventures does not use sustainability indicators. The standardized catalog of PAI indicators (“PAII”) provided by Annex I of the regulatory technical standards issued under the SFDR is not tailored to the specific needs of the Basic Ventures early-stage investment strategy.
In many instances, data will be insufficient for analyzing PAI, and on occasions where data is obtainable, it tends to offer limited comparability and provides only minimal additional insights for Basic Ventures. Therefore, collecting data on PAII will not only increase the administrative burden and costs but also fail to provide a new perspective for Basic Ventures.
Basic Ventures is open to considering PAI in the future if it becomes evident that doing so would significantly enhance the ability of Basic Ventures to identify and mitigate possible adverse impacts of the investments while maintaining operational efficiency and cost-effectiveness.
Article 5 SFDR – Remuneration Disclosure
As a registered alternative investment fund manager within the meaning of the KAGB, Basic Ventures does not have and does not need to have a remuneration guideline or policy in accordance with the requirements of the KAGB. Sustainability risks are not considered with respect to the determination of remuneration.
Sustainability-Related Disclosures
Article 10 SFDR – Sustainability-Related Information About Financial Products That Promote Environmental or Social Characteristics
Basic Ventures Management GmbH, LEI: 52990078CS5HSCRHAX07, is the alternative investment fund manager of Basic Ventures Fund I GmbH & Co. KG (“Basic Ventures Fund I”), LEI: 52990078CS5HSCRHAX07, within the meaning of the German Investment Code (Kapitalanlagegesetzbuch) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure requirements in the financial services sector (“SFDR”)
Summary
This financial product promotes environmental or social characteristics but does not have as its objective a sustainable investment within the meaning of Article 2 No. 17 SFDR. The promoted characteristics are investment restrictions. 100% of the investments will be in line with its investment strategy and investment restrictions.
No reference benchmark has been designated to attain the environmental or social characteristics promoted by the financial product.
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 promoted characteristics are investment restrictions.
Basic Ventures Fund I will not invest in, guarantee, or otherwise provide financial or other support to, directly or indirectly, sectors which are not in line with Basic Ventures Fund I’s investment philosophy, including investments in companies or other entities (i) whose business activity consists of an illegal economic activity (i.e., any production, trade or other activity, which is illegal under the laws or regulations applicable to Basic Ventures Fund I or the relevant company or entity, including without limitation, human cloning for reproduction purposes); or (ii) which substantially focus on: gambling, adult entertainment, controversial weapons/weapon systems, the production of and trade in tobacco and distilled alcoholic beverages and areas directly supporting the development of the items listed under this (ii).
Basic Ventures Fund I will make reasonable efforts through corporate governance or otherwise that portfolio companies continue to comply with the above restriction during the term of the investment.
No reference benchmark has been designated for the purpose of attaining the environmental and social characteristics promoted by Basic Ventures Fund I.
Investment Strategy
The purpose of Basic Ventures Fund I is to build, hold and manage in its own name and for its own account a portfolio of equity and quasi-equity investments in early-stage technology companies with a focus on B2B and deep tech across different sectors primarily in Europe and in the DACH region.
No investments are made in the area of exclusions (see above). As part of the due diligence and ongoing investment management, the investment team for Basic Ventures Fund I will initially and continuously monitor whether the investment restrictions are abided by and whether the investment falls within the investment policies.
As part of the due diligence and ongoing investment management, the investment team will review whether a potential investee company has good governance practices in place. This might include using ESG (environmental, social, and governance) criteria to evaluate companies' performance in areas such as labor practices, human rights, and corporate governance, conducting due diligence on investee companies to assess their management structures, employee relations, and tax compliance, engaging with investee companies through to encourage improvements in governance practices if necessary. The intensity of the assessment is carried out in accordance with the principle of proportionality. Where the manager sees higher risks of a non-compliance, they will intensify the audit.
Proportion of Investments
Basic Ventures Fund I will invest fully in line with its investment strategy and investment restrictions. Basic Ventures Fund I will not invest a portion of its capital in any other asset class.
Monitoring of Environmental or Social Characteristics
The investment team for Basic Ventures Fund I will initially and continuously monitor whether the investment restrictions are abided by and whether the investment falls within the investment policies. Basic Ventures Fund I will not make any investment in the excluded sectors unless previously approved by the advisory committee. Therefore, the achievement of the promoted ESG aspects – no investment within the excluded sectors – can be tracked in a simple way.
Methodologies for Environmental or Social Characteristics
Any potential portfolio company is assessed against the list of excluded sectors prior to an investment. Basic Ventures Fund I verifies on an ongoing basis that no investment falls within any of the sectors excluded under the fund’s investment policy.
Data Sources and Processing
Basic Ventures Fund I receives data provided by the portfolio companies as part of the due diligence process and at regular intervals after the investment. Where necessary or beneficial, Basic Ventures Fund I also makes use of publicly available data. Data processing is exclusively internal and DSGVO compliant. Estimates of data are not made.
Limitations to Methodologies and Data
Basic Ventures Fund I is partly reliant on the information provided by portfolio companies during the due diligence process. Moreover, in the post-investment phase, Basic Ventures Fund I is reliant on the company’s reported data. In both cases, complete data may not always be available due to the nature of the investments. The information is verified only if and to the extent misrepresentations are suspected.
Since Basic Ventures Fund I’s investments are made for a multi-year investment period, Basic Ventures Fund I places a high priority on establishing a trusting working relationship with the portfolio companies to ensure that data is submitted reliably and completely and that the above restrictions are met.
Due Diligence
Basic Ventures Fund I considers the promoted ESG aspects when sourcing new portfolio companies for Basic Ventures Fund I and during the due diligence on targeted portfolio companies. The due diligence is performed by obtaining all information relevant to Basic Ventures Fund I using a due diligence questionnaire, which is then reviewed internally. If necessary, further specific information is also obtained from the potential portfolio companies, should this still be necessary after the detailed questioning. The due diligence process is not externally monitored.
Engagement Policies
Basic Ventures Fund I invests in the portfolio companies for a period of several years. Therefore, Basic Ventures Fund I makes it a priority to establish and maintain a trusting working relationship with the portfolio companies in order to continuously comply with the investment restrictions. Basic Ventures Fund I thus also intends to establish or strengthen the consideration of sustainability risks at the portfolio level. Basic Ventures Fund I is in constant dialogue with the portfolio companies, but as a venture capitalist without majority ownership, the influence Basic Ventures Fund I can exert on the portfolio companies is limited.