The Upright Project is a Helsinki-based company that has built a model to measure a company’s positive and negative impact on the environment, health, society and knowledge. The Upright Project aims to understand the net sum of the costs and gains in order to enable smarter decision-making for companies, investors, and other stakeholders. As they state, people are good at measuring performance but not impact.
Recently, The Upright Project launched a research consortium with a goal to build an overview of the net impact of Nordic investing and business in 2020. We at Butterfly Ventures decided to join the consortium to see how our business is portrayed through The Upright Project methodology and what we could improve. As mentioned in an earlier blog post regarding carbon neutrality, we found out that measuring impact and causalities is complicated. Joining the consortium provided a good opportunity to get accurate results.
Today, Upright published the results, after analyzing the net impact of over 5,000 companies and investors (we’re featured at page 24!).
Four dimensions of net impact
The main objective of our collaboration was to understand the net impact of our portfolio companies. With the data, we could get an unbiased view of what kind of effects our investments cause to the surroundings, and support companies to go in the right direction. The results could also help us in seeing the impacts of different companies in the same scale; it’s often difficult to evaluate, how significant a certain impact is compared to another.
The net impact of a portfolio is based on individual companies’ impact, which is based on products and services the companies provide. The Upright Project net impact model utilizes scientific papers and machine learning to conclude how products, services, and companies affect the four observed aspects: environment, health, society, and knowledge.
The net score of Butterfly Ventures is +6.7. Our portfolio companies in their current state are dominated by creation of jobs and use of scarce human capital, while they also have a large positive impact on health, knowledge, and society.
A closer look into the net impact dimensions
Butterfly Ventures’ portfolio companies seem to have a very minor strain on the environment. The small negative impact is caused by emissions and waste.
Our portfolio has a positive impact on health across different categories. Multiple companies contribute positively to treating and preventing diseases; for example, Surgify technology makes bone surgery safer, Monidor offers an easy-to-use tool for proper IV therapy, and Popit produces smart pill trackers.
Few of our portfolio companies, such as health and fitness application Fjuul, contribute positively to physical activity. Furthermore, Naava has a high score in the health dimension from contributing to meaning and joy. Naava produces smart green walls that bring nature inside buildings and purify indoor air.
The society dimension accounts for the highest positive score. As mentioned above, the creation of jobs relative to the revenue is the largest positive impact of Butterfly Ventures portfolio. Currently, our portfolio companies employ roughly 350 people.
Our portfolio companies use a lot of scarce human capital, i.e. highly educated workforce, which is the main resource used by the companies. According to the Upright Project, this is typical score to early-stage startups with zero or very little revenue stream. Medituner, that has developed the only clinically validated asthma app, is a good example. The team includes medical doctors and researchers with deep domain knowledge, but the startup doesn’t generate significant revenue yet; this contributes to the use of scarce human capital negatively.
On the plus side, many of the companies contribute to knowledge infrastructure, which means enabling the creation and distribution of knowledge. For example, KNL Networks produces IoT and connectivity solutions to maritime, Ladimo offers smarter vision for many applications, (e.g. robotics and autonomous driving), and IPDx technology creates new knowledge that helps doctors to make better-informed diagnostics decisions.
Participating the research consortium was insightful, and it is great see that the results are in favor of Butterfly Ventures’ objectives. We believe that solving real problems related to mega trends generates positive impacts, and the research data validates this view. We’re aware that the model doesn’t display an undisputable truth – as some parts of it are still under development – but it confirms, that we’re in the right track.
We will continue tracking our impact, which we believe will keep increasing positively. Targeting long-term sustainability is important to us, and transparency is a great incentive to continue improvements.
Read more and download the net impact of Nordic investing and business 2020 report here!