Coupling Sustainability Investing with a Geographic Focus: Interview with Undivided Ventures’ Founding Partner

Undivided Ventures

Undivided Ventures was founded in 2021 with the mission to direct expertise and resources to innovations, companies and solutions that aim to make a measurable impact on the built environment. Undivided Ventures is a pan-European and pan-Asian early-stage investment firm with about $50M in assets under management.

Undivided’s strategic value-add comes in the form of Asian market penetration. The firm invests in startups where geographic expansion in Asia is an integral component of their current or future go-to-market strategy. With investment professionals in Hong Kong, Japan, Switzerland and Denmark, the firm couples a global reach with a powerful Asian limited partner (LP) base, consisting of leading real estate developers, construction companies and corporate stakeholders.

Asia’s Stance on Sustainability

It is difficult to generalize sustainability themes for such a large and fragmented continent, but one commonality is the need for commercial viability. Bent explains that Asian developers and construction companies are very price sensitive; paying a premium for a green product does not translate well in Asia, where it might in Europe.

“I think that sustainability is about efficiency,” Bent said. “It should be about reducing costs and materials. In many respects, there shouldn’t be a reason to pay a premium for that. In that sense Asia’s standpoint on sustainability is similar to the U.S.”

Bent also noted that remote work has not persisted in Asia in the same way it has in the U.S. and Europe. This has resulted in a more resilient commercial real estate market where office demand is still relatively strong. Asian asset owners have been “retrofitting buildings to ensure they meet sustainability standards to attract large European corporates,” says Bent.

Bent cited LVMH as an example. The Parisian luxury goods holding company, with brands such as Louis Vuitton and Dior, earning a majority of its revenue in the Asian market, and therefore is seeking a substantial corporate presence in the region. Asian asset owners and developers cater to this clientele with sustainable built spaces.

Sustainable retrofitting is currently the dominant construction theme across Europe, as we learned in an earlier discussion with Bouygues Group's Head of Corporate Venture Aidan Halter.

Sustainable Methodology

Undivided Ventures has developed a successful approach to sustainability investing in the built environment through three principles: impact, economics and market.

Dr. Tim Foreman, who co-founded the firm with Bent and has been researching sustainability in the built environment for years in his academic affiliation with the University of Cambridge, developed a proprietary impact measurement for investments. Actionable data on the real impact of portfolio companies not only gives the firm a competitive advantage compared to other sustainability investors, it also benefits the startups in business development.

The second investment criterion is accretion to the bottom line. Undivided invests in startups with tangible economic benefits for its customers—cost reduction or value add—as opposed to paying a premium for sustainability, which Undivided doesn’t see as sustainable.

Finally, Asian market expansion must be a part of a startup’s current or future go-to-market strategy to receive an investment from Undivided. The firm connects its portfolio with its LPs and network of large corporate players in the Asian built environment to provide a strategic value-add for its investments.

What’s moving the needle?

Bent described two macro trends influencing built world tech in Asia: energy and labor. Energy costs, specifically in countries like the Philippines, are extremely high, which has led companies to think about leveraging renewables to alleviate cost pressures.

Secondly, labor costs are a primary pain point for Asian AECO stakeholders that are exasperated by retrogressive population growth rates. Bent revealed that prefabrication—the Western solution to labor cost inflation—does not move the needle in Asia. Labor costs are so extreme that builders would rather execute projects on-site rather than incur additional transportation costs, according to Bent. This is the rationale behind Asia’s leading position in robotics.

Beyond energy and labor, cultural influences have led to advancements in biodiverse materials. Japan, where nature is considered one of the nation’s core values, is at the forefront of this development. For example, Bent noted, 100 out of 150 Asian member companies in the U.N. TNFD (Task Force for Nature-Related Financial Disclosure) are Japanese. Japan continues to spearhead biodiversity in materials and natural integrations within buildings, exemplified through corporate adoption of Undivided’s portco Gentian, which uses machine learning and remote sensing data to generate ecological assessments.

The Opportunity

AECO corporations in Asia are actively scouting for new tech to bridge the gap between sustainability and efficiency, offering a new frontier for built world startups. Startups have the opportunity to increase their total addressable market by tapping into the most populous region in the world. Understanding the corporate stakeholders and regional influences is a critical first step in reaching this market. Venture funds like Undivided offer a unique pathway for sustainability-driven startups to reach this ecosystem.