After an introductory call with the founders, I dropped everything to get this investment through diligence and in front of our investment committee. Why? The potential of the core technology is enormous, and the founders, Kim and Arne, were nothing short of exceptional. I often tell people that while Tidal’s due diligence process is thorough (and can take a while), I always know in my bones when I’m talking to a Tidal company—and this was one of those situations. The synergy was also apparent for Fair Supply, who were excited about our unique early-stage product and operational expertise.

Businesses face mounting challenges when attempting to reduce ESG risk exposure

More so than ever, it’s clear that market tailwinds are the make or break of a great investment. It’s a combination of the right place, the right time, and of course, the right product. You can spot companies continuing to outperform their targets, despite the current macro environment—and Fair Supply is one of these companies.

You might ask, what’s driving that growth?

For starters, Global legislation is being passed requiring private entities to identify and report on ESG risk beyond Tier 1 of the supply chain. This has now become an urgent priority for the world’s largest organisations. From Global Asset Managers to Fortune 500 companies, the “Chief Sustainability Officer” is morphing from a luxury to a must-have.

The need for better data and tooling in ESG is abundantly clear with existing methods largely falling short:

• For modern slavery, many companies rely heavily on the global slavery index, which only measures modern slavery risk by the prevalence of modern slavery in each country.
• To measure Scope 3 carbon emissions, companies have relied on a methodology of “Emissions Factors”, which is fraught with issues—even going as far as to suggest it may be a gross generalisation that doesn’t reduce emissions at all.
• More recently, incumbents and startups alike have been creating makeshift solutions. They’ve been using a combination of existing datasets and enriching them with primary data to develop automated benchmark reporting tools in an attempt to align with emerging global reporting standards. We believe this system is flawed; most of these players are ‘marking their own homework’ where they’re creating a benchmark and then marking themselves against it.

The leading product in this category will be grounded in deep supply chain data expertise

I remember the overwhelming ‘aha’ moment when we truly understood the product’s uniqueness and potential. ESG risk is hidden deep within supply chains, and visibility into them has been overwhelmingly unavailable to date. Fair Supply co-founder, Arne, spent the last 15 years understanding and solving the data challenges of building global economic supply chain databases. He leveraged this expertise to create Fair Supply, a product that:

• Extends an academic methodology into a commercial proposition for company-specific supply chain analysis, and
• Extends into a System of Action by aligning with reporting guidelines.

Fair Supply is a SaaS platform that provides objective data and insights to help companies understand and manage their exposure to ESG risks across their supply chain. The platform combines proprietary algorithms with data from public sources to help companies map out their exposure to risks (including Modern Slavery, Carbon Emissions, and Biodiversity) and can provide visibility 10+ layers deep into the supply chain. 

And that’s just the first act—our thesis indicates that Fair Supply has the best competitive advantage to create an industry standard and market-leading product globally. It’s set to become the indispensable SaaS tool that ESG procurement and investment professionals use as an integral part of their everyday business practices. Their mission is to abolish modern slavery, and they have a product that could actually make it happen.

Execution during the investment process mirrors execution in the first 12 months post-investment

Time and time again, we’ve seen the skills and expertise displayed during the investment process mirror that seen in the first 12 months post-investment. The signs we look for include:

• When you meet a founder that can push a clean fundraising process from end to end and build the investors’ conviction when sharing each new piece of information.
• Objections and concerns are quickly resolved with accurate data and thoughtful responses.
• No stone is unturned, and in the process, a strong working partnership is established between all parties.
• During the time it takes to complete the deal, there’s an open forum, whether a WhatsApp thread, a daily phone call, or on Slack, where insights are shared, and signs of deal progress are displayed.

The speed and pragmatism with which Arne and Kim execute are second to none. Before the money hit the bank, they had already attracted top-tier product and go-to-market leads into the business. Kim has always said that to be the best, they needed to surround themselves with the best. Other traits we tend to find in our best founders: humility and the ability to drive swiftly toward an outcome. These founders get on a plane, champion their cause, rally their troops around them, manage their stakeholders, push their people to be the best, and never take their eye off the ball. It’s infectious and what early-stage company building is all about. That’s a Tidal company.

We were delighted to have taken part in Fair Supply’s round alongside Airtree, Minderoo Foundation, and QIC. And since then, we’ve been excited by every step forward the team at Fair Supply has made.

We invest across a range of markets, models and products. We live and die by core principles in our investment decisions. For more information on the pillars that make a great Tidal Seed investment, see how we invest here. If you’re a visionary founder ready to make waves, please reach out via our website.