The Appeal of Engagement Services for SaaS Investors

    Stockholm (NordSIP) – At the start of October 2021, shortly after NordSIP first spoke with the company’s founder, Aton Ljung, Esgaia announced it had become the first investment in the Wellstreet Fintech Fund I, managed by Armando Coppola, Partner and Fund Manager at Wellstreet. The fund is backed by top executives from leading Nordic banks and fintech companies including Avanza, Collector, Handelsbanken, Swedbank, Northmill, Resurs and Klarna.

    At the end of last week, Swedish venture capital investor Wellstreet, publicly announced he launch of the US$40 million fintech fund. The Fintech Fund is the second for Wellsteet, which was founded by former Klarna executive Mikael Wintzell. The company’s first fund, the Wellstreet Ventures, closed at a total raise of approximately US$20 million in 2020.

    Investing in Esgaia

    “With the fund being backed by top executives with long experience from leading Nordic banks and fintech companies, we see a lot of legacy systems and processes in different value chains in the global financial system. We believe that new, agile fintech providers are well-positioned to address some of these inefficiencies. Esgaia is an example of this, whereby the company is targeting an important aspect of the investment value chain in institutional investors’ (primarily) post-investment active ownership activities,” Coppola tells NordSIP.

    “Offering the solution as a Software-as-a-service (SaaS) is important for the investment thesis as it provides e.g. proof-of-concept, reduced time to benefit from the service and cost-sharing for longer-term innovation and improvements for customers. In other words, access to best practice functionality, time-savings, and lowered costs. Combine that with the strong benefit of SaaS (if done right) as generally being high-margin businesses and you got yourself an interesting proposition,” Coppola continues.

    “Sustainability today permeates most aspects of business and investments. I believe the attention across the industry will only continue to grow, no doubt though that there are still lots to be done, and tremendous amounts of investments required to address the challenges at hand. Therefore, while we evolve market practices for increased impact, we need to have a level playing field from a regulatory perspective, with adequate scrutiny and accountability of practices to avoid greenwashing,” Coppola adds.

    Developing New Functionalities

    “The capital from Wellstreet is Esgaia’s first institutional money. At this stage, it functions as growth capital for the business. We will evaluate potential additional capital raises as and when needed,” Rickard Nilsson, Director for Strategy & Growth at Esgaia, tells NordSIP on this occasion.

    “When discussing the infrastructure or database to assist with engagement tracking etc., we encounter a variety of setups in discussions with investors. Many times, across the organization, they struggle with e,g. information access and version management (unless fully cloud-based), oversight and monitoring, and smooth reporting on entity and product-level. A purpose-built system like Esgaia’s software solves many of these problems, and it seems to resonate given the number and quality of conversations we are having in the market, with new clients in the Netherlands, UK and the US,” Nilsson says.

    “Currently, partly based on client feedback, we are prioritizing customizable engagement templates for system flexibility, user levels and rights for investors to manage organizational/team structures, and integrations and third-party information access, which is a priority area for us over the short to long-term,” Nilsson continues.

    “Since we last spoke in November, we have advanced platform functionality in a number of areas,” Nilsson says. He cites the four examples of these new functionalities including the addition of “deadlines on engagements and milestones with notifications to better facilitate timely follow-ups; PDF case studies to support stakeholder reporting; a voting module to improve alignment between voting and engagement, for example by linking specific votes to engagements,” Nilsson explains. Another example he pointed to was the addition of “engagement data plugins with live statistics for display on clients’ websites to increase transparency to clients and beneficiaries. Similar to how many investors show live voting records, which makes it probably a market first on the engagement side.”

    Image courtesy of Copyright.Falkuggla AB.Hogalidsgatan.50a.0735044772.Stockholm / ESGaia / NordSIP (Edited)
    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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