The article was first published on March 30, 2022.
Earlier this week, Quest Ventures announced the promotion of two female investors in its team. Michelle Ng, with her promotion to Head of ESG and concurrently Director of Sustainable Impact Accelerator, was named in this announcement alongside Gwen Sim, who was promoted to Associate.
Ng is definitely not a new face in the firm –and in the startup ecosystem in recent years. Joining Quest Ventures in 2020, she has been driving their focus in Vietnam and Central Asia. She formerly headed the internationalisation focus at the Action Community for Entrepreneurship –the national trade association for startups in Singapore– and was with CNBC Asia prior to ACE. She also holds key office bearer positions in grassroots committees and non-profit organisations such as Social Impact Catalyst.
e27 readers may also be familiar with her writings through our Contributor Programme where she had published thought pieces on a wide range of topics from post-pandemic life to how the Russia-Ukraine war will impact ESG investing.
With this promotion, Ng is going to lead the firm’s focus on ESG –a vertical that is becoming understandably popular due to its urgency and ability to create a positive impact in the various aspects of the public’s life.
There are many different approaches to ESG investing with each venture capital firm looking at it from different angles. In this email interview with Ng, we discover how Quest Ventures is viewing this vertical and how their approach sets them apart.
The centre of the problem –and the solution
Quest Ventures takes pride in being one of the earliest in the Southeast Asian (SEA) tech startup ecosystem to recognise the importance of ESG investing back in 2018. As time goes by and investment in the vertical becomes increasingly more important, the firm aims to double down its efforts.
With the announcement of her promotion, Ng states: “Total ESG assets in Asia have grown from a mere US$801 million in 2019 to US$7.9 billion in 2020, and global ESG assets are on track to exceed US$53 trillion by 2025. Investors have realised that people and social impact form the basis of ESG investing, and will no longer be considered in isolation from environmental and governance aspects.”
She continues, “Concerted efforts from the private and public sectors will hasten the integration of the social, technology and finance sectors in order to help socially-impactful enterprises scale further and faster.”
Ng further explains to e27 about the opportunities that the firm intends to pursue and why it requires some significant changes in its approach.
“ESG opportunities identified include the shift to Social (S) in ESG. The human-centricity of ESG investing will become more apparent and urgent,” she says.
She elaborated that with its focus on solutions addressing human-centred problems, the team will invest in and accelerate the growth of socially-impactful enterprises. To realise this mission, Quest Ventures has prepared several initiatives including the Sustainable Impact Accelerator, held in collaboration with raiSE (Singapore Centre For Social Enterprise).
Set to run from June to August this year, the initiative aims to support enterprises with a strong social impact angle and high potential to scale it up. These enterprises will receive funding and capability support to drive their next stage of growth, and gain exposure to investors across key cities in Asia as they work towards raising an institutional investment round in the next 12 months.
In measuring the social-environmental of a potential investment, Ng explains the points that the firm is looking for.
“Social-environmental impact can be measured by the number of people who have access to adequate livelihoods, sufficient nutritious food, clean air and water, and healthcare & well-being. The geographical spread of the impact can be measured, as well as the speed at which it scales,” she says.
“There is also a need to value qualitative data collected through due diligence interviews, which will add colour to findings regarding social-environmental impact. The measurement framework that we have adopted and adapted is discussed at length in Impact Investing Framework for Early Stage Venture Capital,” she continues.
Bringing ESG investment to SEA
When asked about whether strong social-environmental impact always equals strong profitability in ESG investment, or if there has got to be a sacrifice, Ng explains, “Strong social-environmental impact will eventually lead to sustained outsized profitability, rather than a scramble for strong short-term profitability that will fizzle out. ESG-oriented investors look to identify and mitigate ESG risks and capitalise on value creation opportunities to improve returns in the long term.”
But in order for sustainability startups in the region to realise their potential, there are still challenges that remain. For example, Ng points out that, for climate tech startups in SEA to scale, there is a need for large scale financing of US$2 trillion to help the region “go green and stay competitive.”
“Quest Ventures looks to drive investments and capital reallocation into ESG and sustainable impact startups in this region,” she says.
In order to encourage more investment in ESG the SEA startup ecosystem, Ng believes that it can be done through pricing in externalities and re-allocating more resources and capital to help these ESG companies grow and scale.
For Quest Ventures itself, its ESG focus will be a foundation for its investment in the region.
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