For most early-stage founders, ESG doesn’t feel like a strategy. It feels like a surprise.
One moment you’re pitching growth, product, and runway.
The next, you’re being asked for your carbon intensity, gender ratios, and governance policies by investors who never mentioned any of this at seed.
The problem isn’t ESG itself. It’s the timing.
ESG has arrived earlier in the company lifecycle than anyone expected, pushed down by LPs, enforced by VCs, and landing squarely on founders who are still trying to find product–market fit.
The ESG shift no one prepared founders for
Just five years ago, ESG lived in boardrooms and public markets.
Now it lives in data rooms.
Seed and Series A founders are being asked to fill out ESG templates originally designed for listed companies. The same frameworks that assess multibillion-dollar funds are now applied to five-person teams.
This isn’t malice, it’s misalignment.
Regulatory pressure moved faster than operational readiness.
LPs and funds are responding to new rules like SFDR and the Invest Europe data templates, and the only way to stay compliant is to pass those requests downstream to the startups themselves.
The invisible time and cost load
For a founder, every hour not spent on product or sales has a cost. So when ESG reporting enters the equation, it doesn’t just create admin, it reshapes priorities.
Let’s quantify it.
An early-stage founder might now spend:
- 8–12 hours a quarter collecting data for investor ESG templates.
- 1–2 weeks aligning HR or operations policies to new governance standards.
- Thousands of euros in consulting or software costs just to stay investor-ready.
That’s time and capital diverted from growth.
And the irony?
Many founders don’t even know why they’re being asked for this, only that their investors suddenly need the numbers.
The psychological burden: fear of getting it wrong
ESG pressure hits differently when you’re small.
Large companies can hire sustainability leads and compliance officers. Early-stage founders have to learn on the fly and fast.
Most don’t fear the work; they fear the repercussions of imperfection.
A founder put it plainly:
“If I say we don’t have a DEI policy yet, will my next investor walk away?”
This fear is real and misplaced.
The best investors don’t expect perfect ESG systems from early-stage companies. They expect awareness and intent.
But that nuance often gets lost in translation when reporting requests arrive as complex templates with no context.
How the ESG burden builds within an early-stage company
- The first request: Your VC asks for ESG data to satisfy LP reporting. You scramble to fill out a spreadsheet you barely understand.
- The second round: The next investor wants the same data, but in a different format.
- The board stage: You’re now expected to show quarterly improvement on those metrics, even if your headcount barely doubled.
- The due diligence stage: ESG maturity becomes a risk factor for future rounds, even though no one defined what “maturity” means.
By Series B, founders realize they’ve accidentally built an internal ESG function, but without the clarity or resources to run it properly.
This isn’t founder failure. It’s a capital transmission problem.
LPs → GPs → Startups.
Each layer pushes ESG responsibility to the next because regulation doesn’t distinguish between fund stages, only between entities holding capital.
So a 50-person VC fund must collect ESG data from its entire portfolio to report to its LPs. And that’s why a five-person startup now receives a data request originally designed for someone much bigger.
What started as a compliance framework for asset managers is now the operational reality for founders.
ESG fatigue is a real risk
If this continues unchecked, early-stage founders will develop ESG fatigue, the same way founders once developed “pitch deck fatigue.”
That’s dangerous for everyone. Because the moment ESG feels like another investor checkbox, its credibility collapses.
The goal of ESG was to surface hidden risks, not to bury early companies under them.
If founders start disengaging, the data will degrade, and the entire reporting system will lose meaning.
The emerging fix, a simpler, smarter ESG
Thankfully, the industry is starting to recognise this imbalance.
Funds like KfW Capital, Speedinvest and the European Investment Fund (EIF) are now working to standardize data collection through the Invest Europe ESG Data Template, reducing duplicate requests and creating consistency across funds.
That’s progress.
But the next step is usability: contextualizing ESG for stage, sector, and scale.
An AI startup shouldn’t answer the same ESG questions as an industrial manufacturer.
A five-person team shouldn’t spend days filling in templates built for listed companies.
We need ESG proportionality frameworks that scale with the business, not against it.
How to turn ESG from a burden into advantage
For founders, ESG doesn’t have to be a distraction. Handled right, it’s an alignment tool, a way to show investors that you understand the systems around your company, not just the code inside it.
Start with three steps:
- Understand your dependencies. What resources, people, or geographies could break your business if disrupted?
- Document the basics. Simple governance, hiring, and operational practices go a long way.
- Talk to your investors. Ask what they actually need and why...most will work with you to simplify it.
The best founders don’t resist ESG. They translate it. They know that investor compliance is an opportunity to prove maturity early.
The Planicorn takeaway
ESG isn’t the enemy of early-stage founders, misalignment is.
The system evolved faster than the support.
And until the ecosystem designs ESG frameworks that match startup realities, founders will keep carrying more than their share of the load.
But that’s also where the opportunity lies.
Founders who can show they understand ESG, not as compliance, but as risk fluency, will earn investor trust faster and raise more confidently.
Because in venture, understanding your exposure is as valuable as proving your growth.
At Planicorn
We help early-stage founders and VC funds simplify ESG by translating regulatory requests into practical, stage-appropriate actions that save time and build trust.
Because resilience shouldn’t be a burden. It should be a competitive edge.
