Today Tallinn-based startup Esgrid announced that it has secured €500,000 Pre-Seed funding to build accessible value chain sustainability management tools, noting enterprise and financial sector clients among its customer base.

Founded in 2023, Esgrid provides value chain sustainability management solutions for medium-sized enterprises and financial institutions. 

Esgrid launched publicly in December and won a €150,000 syndicate investment award from EstBAN at sTARTUp Day in January 2024. 

I spoke to CEO and co-founder Oksana Tolmatšova to find out more.

The company has developed a platform that helps businesses assess, manage, and improve their value chain sustainability impact, ensuring compliance with ESG standards. 

Tolmatšova sees two root causes for their customers to undertake digital services provided by Esgrid. 

One is the legislation which obliges 50,000 enterprises across the European Union to report on their sustainability efforts.

However, the second is the impact of ESG accounting in business relationships. 

Tolmatšova shared: 

“For example, one customer, Nordic Milk, a large dairy company from Estonia, cannot sell their produce to Scandinavia if they can’t account for where the milk is coming  from, how it is produced, the health of the cattle, etc.” 

Critically, the company is targeting the medium size enterprise market,  a business subset who are most likely to be impacted by the costs of their value chain sustainability management.

Specifically, Esgrid is addressing the reality that only a small part of credit and procurement decisions consider the sustainability of SMEs, which comprise 60 percent of enterprise and financial sector value chains. The tools for effectively managing the environmental, social, and governance impact are either missing or cost between €50,000 and €100,000 per year at medium-sized businesses. 

Esgrid promises to reduce the annual cost by 10 times. 

In support of this cause, Esgrid has developed AI-assisted functions for supporting users in providing and analysing ESG data. 

Last week Esgrid launched a free tool for SMEs – the ESG self-assessment. It helps any company, regardless of size, easily prepare for ESG data requests from business partners and get a clear snapshot of their current sustainability progress.

Users receive: 

  • An ESG health report on their progress
  • One-click data sharing with partners on the Esgrid platform
  • Professional support and guidance at every step of the assessment

Tolmatšova detailed that Esgrid’s AI-driven platform makes it stand out from its competitors noting, 

“We are probably one of the first who are trying to utilise AI in sustainability fields. We offer full AI-supported assistance for value chain companies. 

We are also preparing to launch our first enterprise AI assistant for enterprise customers that helps get actionable information from collected ESG data.”

Interestingly, the majority of value chain companies are SMEs that are not currently obligated to disclose their sustainability efforts. This will change in the future with a growing requests from enterprises and financial institutions.

According to Tolmatšova: 

“We help the market direct more capital towards sustainable business practices and contribute to solving critical environmental and social issues.”

To date, Esgrid has signed enterprise customers such as Ibis Hotel, Nordic Milk and Utilitas and financial sector companies like Specialist VC and Fjord Bank. Over 100 companies are now providing ESG data on the platform.

Investors in the round were Lemonade Stand, EstBAN, Startup Wise Guys and Little Green Fund with notable participation from key former employees Wise, including Alvar Lumberg, Kairi Pauskar, and the founders of Klaus, Kair Käsper and Martin Kõiva.

Siim Teller, the managing partner at Lemonade Stand, explained: 

“To reach our climate goals, we need data that helps direct money to sustainable companies. 

The Esgrid team not only has a great vision for building the right tools and systems for this purpose, but they also move fast. They landed their first customer before writing any code, building the product alongside them. They’ve nailed solving a big pain point for their customers.”

Lead image: The Esgrid team. Photo: uncredited. 

Source: Tech.eu