Startup of the Day: Esgrid, an Estonian provider of value chain sustainability management solutions

Founded in 2023, Esgrid provides value chain sustainability management solutions for medium-sized enterprises and financial institutions. Its platform helps businesses assess, manage, and improve their value chain sustainability impact, ensuring compliance with ESG standards. Currently, over 100 companies uses ESG data on the platform. In may 2024, the startup secured €500,000 in a pre-seed funding from  Lemonade Stand, EstBAN, Startup Wise Guys, and Little Green Fund.

In the Startup of the Day column, Oksana Tolmatšova, Katrin Isotamm, Jevgeni Bogatõrjov, and Ott Ilves, the founding team of Esgrid, share the details about the startup’s idea, its product, and future plans.

The Startup of the Day column on AIN is dedicated to tech projects from all sectors that originate from the CEE countries. If you would like to introduce your project, please fill in the questionnaire.

Tell us about your startup. How does it work?

Esgrid builds affordable value chain sustainability management tools for medium-sized enterprises and financial institutions. Our digital platform streamlines the entire process of value chain sustainability management and reduces ESG data collection and analysis costs by ten times. By utilizing the power of AI, we help SMEs (value chain companies) easily navigate the ESG assessment process and enable enterprise customers to gain deep insights from the collected data.

How did you come up with the startup’s idea? What was the reason/motivation behind it?

Our team believes that companies of any size should conduct business in a way that does not harm the environment and society, and that capital should support this approach.

When we started examining current financing and procurement processes a year ago, we discovered that most of them do not take value chain sustainability into account, which is a huge problem,

After talking to more than twenty companies in the Baltics, we realized that there is no easy way to collect and analyze the necessary data, so we decided to develop a needed solution.

How long did it take to reach the prototype or MVP? What did you encounter?

With over 10 years of startup experience in our team, we decided to find our first customer before even prototyping the MVP. We were lucky to attract interest from a large enterprise in Estonia, which helped us build the MVP to meet real customer needs.

It took us five months to build the initial product with very limited resources from the founders and family members. This allowed our pilot customer to efficiently collect ESG data from value chain companies and gain initial insights. The pilot results were very good, which encouraged us to move forward.

Tell us about the startup’s business model. How do you monetize your product?

We charge enterprises and financial institutions an annual fee based on the size of their value chain. Value chain companies provide their ESG data for free.

In the future, we plan to introduce a monthly subscription fee-based premium plan for SMEs that will unlock easy-to-use sustainability management tools for them.

What are your target markets and consumers?

We target the medium-sized enterprise market globally, starting in the EU.

If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.

Today, we already have 8 paying enterprise customers and over 150 registered value chain companies. We are growing 100% month over month in terms of the number of customers and ARR. Our platform delivers an exceptionally high ESG assessment rate of 82%.

What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.

Our six-member team is relatively small but very experienced. We are confident we can achieve this year’s targets with our existing resources.

Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.

We recently closed our €500,000 pre-seed round with participation from Lemonade Stand, Startup Wise Guys, EstBAN, and several angel investors. The raised funds will help us make several valuable additions to our product, acquire up to 30 enterprise customers, and expand into the financial sector in the next 12 months.

What’s next? Tell us about your future plans.

We plan to introduce several AI-powered product features that will significantly simplify ESG data analysis for our customers. From a sales perspective, while continuing to build our customer base in the Baltics, we will run marketing experiments in several large EU markets.