Disclosures under the European Sustainable Finance Disclosure Regulation (EU 2019/2088) (“SFDR”)

Sustainability Risks

Within its investment process and due diligence, Curiosity Venture Capital B.V. (“Curiosity”) considers ESG-related matters, including sustainability risks (i.e. environmental, social, or governance events or conditions, the occurrence of which could have an actual or potential material adverse effect on the value of the investment), internally and with target companies using a questionnaire and a framework setting out environmental, social and governance KPIs and targets as well as possible activities for progress. The results of such assessment are addressed in Curiosity’s investment memorandum and taken into account in its investment decision. Curiosity remains free in its decision to refrain from investing or to invest despite sustainability risks in which case Curiosity can also apply measures to reduce or mitigate any sustainability risks. At all times, Curiosity will apply the principle of proportionality taking due account of the strategic relevance of an investment as well as its transactional context.

Principal adverse sustainability impacts statement

Summary

Curiosity considers the principal adverse impacts of its investment decisions on sustainability factors before and after investments. Sustainability factors mean environmental, social, and employee concerns, the responsible use of technology in line with regulations, respect for human rights, inclusion & diversity, and the fight against corruption and bribery. Curiosity also aims to minimise its own carbon footprint. Curiosity collects information regarding principal adverse impacts from portfolio companies using a questionnaire prior to the investment as well as on an ongoing basis. Curiosity re-assesses its policies and conducts training and workshops regarding ESG on an annual basis. This principal adverse impacts statement dates as of April 6, 2022.

Description of principal adverse sustainability impacts

Curiosity applies its approach to consider adverse sustainability impacts within the meaning of the SFDR from April 6, 2022 onwards and will report as required and appropriate.

Description of policies to identify and prioritise principal adverse sustainability impacts

Curiosity considers ESG matters in its investment process and due diligence, as described under Sustainability Risks above. This also includes considering the principal adverse impacts of its investment decisions on sustainability factors (environmental, social, and employee concerns, respect for human rights, and the fight against corruption and bribery) before and after investments. In addition to the pre-investment screening (see above under Sustainability Risks), Curiosity assesses ESG matters on an ongoing basis using a questionnaire. This questionnaire includes (i.a.) questions relating to the management’s commitment to improving ESG practices and processes, diversity and inclusion, responsible use of (artificial intelligence) technology and assessing and implementing practices to reduce the target company’s environmental impact. In addition, Curiosity applies best efforts following the closing of investment of the Fund, to have the management of the respective portfolio company commit to (1) adopting an AI ethics policy and establishing best practices to ensure responsible use of its AI technology, minimising risks of misuse and complying with data & AI regulations (2) adopting a diversity & inclusion policy, stimulating diversity in terms of gender, ethnicity and cultural background of the organisation and its management and creating a safe and inclusive working environment, (3) adopting a climate policy and implementing measures to improve the CO2 footprint of such portfolio company and (4) evaluating and establishing best practices of its business activities in regards to the environment, society and governance (ESG), provided that any such effort shall always respect the principle of proportionality in particular with respect to the investment’s strategic relevance, the expected materiality of such adverse impacts in light of the target company’s business model and trajectory as well as the transactional context of that investment.

Engagement policies

Curiosity decides at its sole discretion whether or not to make an investment in light of principal adverse impacts on sustainability factors, and Curiosity may apply risk mitigation measures where appropriate. Curiosity organises workshops for portfolio companies to support them in dealing with such issues appropriately.

References to international standards

Curiosity is a member of Fundright.nl and commits to its goals and actions to promote diversity in the Dutch venture capital industry. Curiosity is not a member of any other international bodies, organisations or required by any national or international convention or standard to comply with any further requirements.

Sustainability-related disclosures

Summary

Curiosity Early Stage Fund Coöperatief U.A. (the “Fund”) incorporates ESG principles within its investment processes and within its monitoring processes.

No sustainable investment objective

Sustainable investment is not an objective of the Fund.

Environmental or social characteristics of the financial product

The Fund shall not:

  1. invest, guarantee or otherwise provide financial or other support, directly or indirectly, to companies or other entities whose business activity consists of an Illegal Economic Activity; and/or
  2. invest, guarantee or otherwise provide financial or other support, directly or indirectly, to companies or other entities which substantially focus on:
    - the production of and trade in tobacco and distilled alcoholic beverages and related products;
    - the financing of the production of and trade in 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;
    - casinos and equivalent enterprises; and
    - the research, development or technical applications relating to electronic data programs or solutions, which: (i) aim specifically at supporting any activity referred to under (a) and (b) (1) to (3) above; internet gambling and online casinos; or pornography; or (ii) are intended to enable to illegally enter into electronic data networks or download electronic data.

Curiosity subjects the Fund to its ESG Policy in which Curiosity commits to actively evaluate and measure the impact of its work and of the companies Curiosity partners with in order to ensure responsible investments in particular with regard to the responsible use of (AI) technology, but also involving environmental, social and governance safeguards.

Investment Strategy

The Fund invests in companies with innovation capacity and growth potential that are active in AI software technology with a focus on the following segments, e.g., Enterprise Software, MLOps, HRTech, Fintech, LegalTech, PropTech, Security, Marketing/Ecommerce and Logistics. The Fund intends to invest in Seed investment rounds with an initial ticket size for the Fund of EUR 500,000 to EUR 1,500,000. The Fund intends to invest in portfolio companies domiciled in, or mainly operating out of the Benelux, Nordics and Baltics countries.

Proportion of investments

The Fund does not invest a fixed percentage in portfolio companies aligned with environmental and/or social characteristics. The Fund will invest fully in line with its investment strategy. No portion of the Fund’s capital will be allocated to other asset classes.

Monitoring of environmental or social characteristics:

Curiosity monitors for the Fund ESG compliance on an ongoing basis. Annually, Curiosity uses its ESG framework that includes questions and KPIs to assess ESG matters including potential or existing adverse sustainability impacts. Curiosity carefully reviews such completed questionnaires upon receipt. Furthermore, Curiosity applies best efforts following the closing of investment of the Fund, to have the management of the respective portfolio company commit to (1) adopting an AI ethics policy and establishing best practices to ensure responsible use of its AI technology, minimising risks of misuse and complying with data & AI regulations (2) adopting a diversity & inclusion policy, stimulating diversity in terms of gender, ethnicity and cultural background of the organisation and its management and creating a safe and inclusive working environment, (3) adopting a climate policy and implementing measures to improve the CO2 footprint of such portfolio company and (4) evaluating and establishing best practices of its business activities in regards to the environment, society and governance (ESG), provided that any such effort shall always respect the principle of proportionality in particular with respect to the investment’s strategic relevance, the expected materiality of such adverse impacts in light of the target company’s business model and trajectory as well as the transactional context of that investment.

Methodologies

Currently, the methodologies applied comprise of collecting information via a questionnaire from the portfolio companies prior to the investment, i.e., within the due diligence process, and on an ongoing basis following the investment. Curiosity uses a framework of both questions and KPIs to assess environmental, social, and governance matters.

Data sources and processing.

The qualitative and quantitative questions provided via the framework are completed by the portfolio company.

Limitations to methodologies and data

The information collected via the questionnaire as part of Curiosity’s due diligence on behalf of the Fund is externally verified only if and to the extent misrepresentations are suspected. Thus, it cannot be ruled out completely that false information may remain undetected in certain cases. As the Fund’s investment is made for several years, Curiosity considers it a priority to establish and maintain trust within a good working relationship with the portfolio company as a safeguard in light of the limitations described in this section.

Due diligence

Initially, the assessment of how the Fund’s investment in the portfolio company relates to the environmental, social or governance characteristics mentioned above is carried out as part of the due diligence process using a questionnaire. Via the questionnaire, qualitative statements of an environmental or social nature or relating to corporate governance are requested from the portfolio companies and then taken into account in the investment decision-making process. The findings relating to the environment, social or governance aspects are non-binding and being considered in light of all circumstances including the size of the investment, its strategic importance, its envisaged trajectory as well as the transactional context.

Engagement policies

Should Curiosity on behalf of the Fund determine any potential issues relating the environmental, social or governance characteristics, it will engage the portfolio company’s manager in discussions with a view to resolving, reducing, or mitigating such effects, provided that such efforts will always remain within a scope considered by Curiosity in its absolute discretion to be proportionate in light of the size and strategic importance of the respective investment in the portfolio companies and shall take into account the respective bargaining positions and transactional context. Curiosity organises workshops for portfolio companies to support them in dealing with such issues appropriately.