Contxto – While it had already invested in two startups, Fliper and Antecipa, XP Ventures—the new corporate venture capital (CVC) arm of asset manager XP Inc.—is officially declaring its launch into the world.
And it has R$8 billion (~US$1.5 billion) of its own capital at hand to invest in startups.
XP Ventures is in it to win it
The CVC is open to startups at all stages of growth and it’s indifferent as to how much it’s willing to pitch in a round.
“If we see an opportunity, we’ll call our committee and raise the funds to invest in that opportunity. If we find 15 or 20 companies that are interesting and that make sense to us, we will invest,” explains Marcos Sterenkrantz, Head of XP Ventures.
But if XP Ventures doesn’t find anything worth its while, it’ll just hold onto its capital.
Moreover, XP will only look into equity investments when a startup’s products are actually relevant to the XP’s strategy. Meaning its endgame won’t ever be to sell companies to turn a profit. XP is in it for startup keepsies.
“We are not a venture capital fund that’s looking for a startup to invest and sell 10 years from now at 50 times its value. We want to find companies that enhance the purpose of XP, to help Brazilians invest better, and we also want to be smart money investors,” added Sterenkrantz.
For the moment, the XP Ventures team is interested in companies working on environmental, social, and governance (ESG) issues. Correspondingly, it will hold a pitch day for startups at the end of this month.
Let’s talk ESG
Growing awareness of humanity’s impact on the environment is leading to consumers—particularly millennials and Gen Zers—to more consciously engage with enterprises who take these matters seriously.
Similarly, the recent Me Too and Black Lives Matter movements have highlighted the importance of bringing social topics at the forefront of businesses.
In light of these changes, it’s easy to understand why XP Ventures or accelerators like 500 Startups are intrigued by ESG.
Rightly so, startups—whether their products directly address ESG issues or not—should incorporate these topics into their business as early as possible.
For one, researchers at Harvard have found that ESG-conscious companies perform 4.8 percent better than those who don’t give a damn. It’s also relevant when it comes to attracting and retaining talent.
With job hunters increasingly attracted to company cultures that address ESG topics, it’s important that startups act on it to bring in the best.
But above all else, startups should consider ESG issues because it’s the right thing to do.
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