89% of global investors are considering Environmental, Social, and Governance (ESG) as a factor in their investment decisions, leading corporations to become increasingly concerned about how their operations can be safeguarded against future risk. While larging corporations have significant resources to address their ESG impact, it hasn’t always been so accessible for smaller and mid-sized businesses. FuturePlus is an ESG and sustainability reporting platform that has developed between 200-250 indicators across a company’s operational footprint, based on the size of the business to provide an empirical representation of any organization’s ESG efforts. The platform focuses on five key areas: Climate, Diversity & Inclusion, Environment, Social and Economic impact. In addition to providing the quantitative assessment, FuturePlus is a dynamic tool that allows companies to set sustainability goals, build an implementable plan to achieve these goals, and monitor the progress along the way with insights for improvement. Companies on the platform, as a result, are able to lower costs, attract new talent, manage liabilities, and access new revenue opportunities in a data-driven manner.
London TechWatch caught up with FuturePlus Cofounder and Partner Alexandra Smith to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to £1.6M, and much, much more…
Who were your investors and how much did you raise?
Sustainability and ESG management and reporting platform FuturePlus has recently closed an up-round of £750K with further investments from Two Magnolias, Vala Capital, and HNW individuals and family offices.
Tell us about your product or service.
FuturePlus is a sustainability management and ESG reporting platform that allows companies of all sizes (but particularly micro, small and medium-sized organisations that are underserved in this area), to measure, evidence and substantiate their sustainability and social impact and demonstrate this to investors and customers.
The measurement tool we have developed has approximately 200 indicators for micro and small businesses (for us a micro organisation is under 50 employees, and a small one is under 250 employees), and about 250 indicators for medium to large organisations.
These are grouped into five themes: Climate, Diversity & Inclusion, Environment, Social and Economic impact.
These themes are then split across the subcategories of Governance, Leadership, Workforce, Supply Chain, Ecosystem, Carbon Footprint, Manufacturing and Industry and Global Goals.
These subcategories allow for a weighting of the indicators from Governance at the highest weighting to Global Goals, producing a comprehensive overview of an organisation’s social, environmental and ethical policies and the outcomes a company’s procedures and products create. Our algorithm is developed to allow for organisations of different sizes and from sectors to be compared fairly.
In addition to understanding the current sustainability status and score of an organisation, the portal will allow organisations to create an ambition for the sustainability objectives they are yet to achieve. This allows them to both understand where they are now and where they want to be over the next three years, and track both profitability and impact over the same investment period.
This ambition rating gives them the opportunity to commit to action within a defined timeframe, and forms the basis of an ‘ambition rating’, which bolsters their score and incentivises the organisation to reduce its negative footprint and increase its positive social and environmental impact.
The ambition rating provides the basis of a sustainability roadmap that can integrate with leading project management platforms, and access to specialist advisory services provided by FuturePlus to guide clients along their journey.
As the measurement process requires engaging with the organisations, rather than ‘scraping’ data from external sources, the score is dynamic and can be updated by an organisation on a continuous basis, allowing them to showcase the changes they make and consistently improve their ESG score and positive impact. However, it also allows for scores to be reduced should ambitions and requirements not be met.
Our ESG model speaks to both consumer demand, and investment market data requirements to provide transparency and accountability for organisations in a way that can improve marketability and create better returns.
From being able to demonstrate customer appetite, to reducing the cost of borrowing, and improving the value of your organisation, we believe that there are significant commercial returns that can be achieved by being a more sustainable and responsible business.
What inspired the start of FuturePlus?
Mike Penrose (cofounder) and I saw that there was a gap in the market for a more authentic and accessible way to weave sustainability practices into the fabric of commercial business, no matter what the size of the company.
We started The Sustainability Group in 2019 to revolutionise the path towards a sustainable future by making it truly accessible and achievable for all businesses. Our vision for a better future requires all businesses to contribute to meaningful and effective social and environmental change regardless of their circumstances. For this to happen, we believe they needed access to simple, affordable solutions.
We noticed that some of the most popular ESG measurements and ratings available were either extremely difficult to achieve, very expensive and/or required specialist knowledge. Some were simply lacking the governance required for certification, whilst others lacked transparency and accountability, thereby rendering the companies that do sustainability well under the same contentious umbrella. Surely there had to be an easier and fairer way to embed sustainability into a business that clearly demonstrates the results and ambitions of that journey? That’s why in February 2022, we launched FuturePlus, our sustainability management and ESG reporting platform.
FuturePlus is built on the belief that we wanted to support all businesses in becoming more ESG smart, helping them to manage their sustainability across supply chains, products, and services. We also wanted to ensure that there was ongoing advice and expertise to guide and encourage companies to map out what their sustainability ambitions are and then give them the ability to achieve those goals.
With FuturePlus, we are demonstrating that sustainability can be delivered in a fair and equitable manner regardless of location, size of the company or depth of experience with ESG. Companies that embark on this journey quickly realise the commercial benefits as well as the role played in taking small, incremental steps, which all add up to the greater good.
How is it different?
FuturePlus’ mission is to make sustainability management accessible, affordable, achievable and trackable for every business – not just the 1% that are able to jump through expensive, laborious hoops to win a coveted badge.
Unique to FuturePlus is the ability to quantify intent and track sustainability ambition. Whilst the focus has always been on historical data, FuturePlus aims to help organisations to understand what it has achieved across social and environmental indicators and to also continuously achieve and improve their sustainability and ESG goals in a timely fashion, as well as reporting them back to stakeholders (from consumers, to regulators and investors) in an easy and professional manner, providing commanding accountability and transparency to claims, ultimately gaining their trust.
FuturePlus’ strengths lie in onboarding companies from all sectors and of any size, whilst constantly encouraging and educating clients on not only how to be sustainable, but what to do to get there. Furthermore, the platform gives clients the confidence to engage their suppliers and partners to join them in meeting their sustainability ambitions across the five themes. It is why FuturePlus continues to grow successfully because it removes the overwhelming confusion around how to start this process as well as how to measure and communicate success.
What market are you targeting and how big is it?
Previous research has shown The TAM/TSM is £153B/£15.3B, respectively (Statistica, 2021). The expected CAGR for the industry is 24.3% (Allied Market Research). The TAM is for all businesses and all non-retail investors who have a commitment to sustainability or are required to report on their ESG performance.
FuturePlus’s serviceable market, SMEs in Europe and the US who are required to report on sustainability (it’s about 10% of all SMEs/5.1M businesses).
What’s your business model?
SaaS platform using a retained membership/subscription coupled with consultancy.
How are you preparing for a potential economic slowdown?
Research has shown that businesses that place ESG and Sustainability at the heart of their operations will build a great deal of resilience against any economic slowdown. Research also shows that by demonstrating ESG in commercial models, you are able to mitigate risk and be more aware of areas where improvements can be made. As a result, when funding is required, those with strong ESG performance will be favoured.
What was the funding process like?
The raise was completed through a tricky economic background, however, the investors we engaged with were supportive throughout the fundraise. With down valuations and extensive tech layoffs, VCs have been evermore vigilant as to where investments should be made, focusing on profitability, strong market positioning and strategic growth. As reported by the British Business Bank, we know that for every £1 of venture capital (VC) investment in the UK, all-female founder teams get less than 1p, all-male founder teams get 89p, and mixed-gender teams 10p. As a mixed-gender founder team, we are proud to have raised so successfully in the current market.
This fundraise has been conducted in a very challenging economy, but our merits and successes are firmly rooted in the fact that we have an incredibly strong team that is tackling sustainability in a way that’s never been done before. We’re proud that the VCs we’re working with can see that we are breaking new ground in a global business challenge that is not going away. We believe that approaching sustainability as an ongoing process creates a perpetual space for continual improvement, resilience building and prosperity for all organisations, including our own.
What are the biggest challenges that you faced while raising capital?
At the end of 2022, the economic conditions were tough and unexpected. Then we had the failures of Credit Suisse, SVB and First Republic banks causing a real stir amongst VCs – meaning they are more cautious than ever. VCs are looking for a strong market position, strategic growth and profitability when they invest in businesses.
The latest investment round is a testament to the potential of FuturePlus’ platform and the business acumen of us as founders and our leadership team – as well as representing an impressive achievement in an environment where the cost of living crisis is impacting the risk appetites of funds and VCs, and Q1 of this year being the slowest fundraising quarter in Europe in over six years. Although conversations took longer than usual, we were in a position where we were also resolving the ESG issues of the VCs who are required to meet increasingly tight regulations across various locations.
The newly-secured funds will take the business to profitability and enable it to invest in staff capacity, the development of the platform, and client acquisition through marketing and PR.
What factors about your business led your investors to write the cheque?
We are highly innovative, meaning we have excellent USPs whereby we focus on sustainability ambitions, quantifying those and helping companies achieve them in a timely fashion. We ensure that companies are constantly developing and learning in their sustainability journey, making them commercially viable in this economy. This is more appealing than awarding a coveted badge to historic achievements. ESG reporting becomes authentic, accountable, easy to manage, and meets tight regulations, especially for portfolio managers with many companies they need to monitor. Our platform cross-pollinates across all sectors and industries including the ability to aggregate data to manage supply chains and portfolios, which makes us highly investible.
We are highly innovative, meaning we have excellent USPs whereby we focus on sustainability ambitions, quantifying those and helping companies achieve them in a timely fashion. We ensure that companies are constantly developing and learning in their sustainability journey, making them commercially viable in this economy. This is more appealing than awarding a coveted badge to historic achievements. ESG reporting becomes authentic, accountable, easy to manage, and meets tight regulations, especially for portfolio managers with many companies they need to monitor. Our platform cross-pollinates across all sectors and industries including the ability to aggregate data to manage supply chains and portfolios, which makes us highly investible.
What are the milestones you plan to achieve in the next six months?
Opening an international office due to market expansion across the Middle East, India, and mainland Europe.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Investors are looking for resilience, profitability and a strong market position. If you can differentiate yourself, it has to be with ESG. You need to demonstrably show that you are acting with integrity and a commercial mindset when incorporating a roadmap that illustrates constant development. Placing sustainability at the heart of operations will set you apart from competitors, so invest your capital wisely if you want to secure future funding.
Where do you see the company going now over the near term?
Over the next 12-24 months, we are investing in PR, marketing and talent acquisition to help us bring awareness to an underserved market that urgently requires help in building resilient businesses.
What’s your favorite coffee shop or location to hold a meeting?
Spring London (Somerset House)
Grind Coffee shops
Soho House (any)
