Heightened interest in Environmental, Social, and Governance (ESG) issues has taken root in recent times. Activists are demanding concrete action from policymakers and investors, in turn, are sitting up to take notice.
Amasia, a Singapore- and Silicon Valley-based venture capital firm founded by Ramanan Raghavendran and John Kim, shared that ESG conversations have progressed significantly since the VC first began forming its sustainability thesis in 2019.
Profit and impact are no longer seen as direct trade-offs. In fact, they’re increasingly seen as having a symbiotic relationship, and one might even argue — an enhancing effect when it comes to generating returns.
“With more and more research today, it’s increasingly obvious that there isn’t just an existing sub-segment of the investment universe that can make an impact, but you’ll increasingly need to be focused on doing good things for society and the environment in order to make superior returns,” said John Kim, managing partner at Amasia.
But venture capitalists, like many global asset and fund managers, have found themselves swimming in reams of ESG definitions, data, and frameworks, each adopting different approaches to similar missions. Further adding to this complexity is the VC’s focus on early-stage projects, which are already challenging to measure and execute as investors.
All these point to a long road ahead for ESG investing, even for sustainability-focused investors like Amasia. But even so, Kim argues that impact has to be far more than skin deep.
The VC firm is in the midst of building a framework that helps private equity firms on sustainability and impact. According to Kim, it will be one of the first in the industry to do so, covering impact measurements and guidelines, which other VCs may refer to in the coming months.
“We have plans to roll out a version of it more widely in the coming months, so other VC firms can use this framework as well,” shared Kim.
Amasia’s investment framework is rooted in the 4 Rs of behaviour change — Reduce and Regenerate, Reuse and Recycle, Replace Bricks with Bytes, and Rationalise Resources.
It oversees “several hundreds of millions of dollars” of assets under management (AUM) across two funds and special purpose vehicles (SPVs). Some of its Southeast Asian portfolio investments include Tokopedia, Super, Xendit, TreeDots, Divigas, and Maicoin.
Edited excerpts of an interview with John Kim, managing partner of Amasia:
