ESG data management software company Novisto has secured approximately $27.2 million in a Series B funding round led by Inovia Capital, which it will use to accelerate its product development and market expansion.

The round includes new investments from Portage and SCOR Ventures, and participation from existing investors White Star Capital and Diagram Ventures. The fundraising took place in late 2022.

“We're witnessing, obviously, a transformation to work towards sustainability . . . Companies are going through what I think is a major shift, and this shift is driven by multiple drivers," Novisto CEO and co-founder Charles Assaf told SustainableBiz.

"Obviously, many investors today integrate ESG considerations into their investment decision process. But more importantly, we've seen a rise of regulations, directives, initiatives across different jurisdictions, jurisdictions that are obviously pushing companies to make ESG reporting not just standardized, but audited and also digitized," Assaf said.

"Obviously, as a result, corporate ESG disclosures have become a must, and Novisto is really super well positioned to capitalize on this massive opportunity.”

Launched in 2019, the Montreal-based company has over 100 employees located in North America and Europe.

Novisto’s funding

In essence, Novisto’s platform allows companies to streamline their ESG data and goals using AI-driven insights. Also included are industry-specific guidelines and advice, as well as support for several business use cases depending on the stage of ESG maturity.

“We had multiple relationships coming into this round. We had built very strong links to some of the most notable investors that we've been updating and keeping kind of in the loop of what we're doing,” Assaf said.

Founded in 2016, Portage is a Toronto-based global investment platform focused on fintech and financial services. SCOR is based in France.

The existing investors, White Star and Diagram, are headquartered in New York and Montreal, respectively.

Novisto’s plans

Assaf did not delve into specifics on Novisto’s plans for product innovation, only to say that it will involve further improvements to its AI to drive better analytics.

“What I can share, at a high level we've built and we are continuing to refine what is a very complex and complete data management software with the next modules or the next innovation within the product (that) pertain to all the analytics and how to make the data useful, be it for ESG decisions, be it for sustainability management programs,” he explained.

The company has customers in Europe and the U.S, as well as Canada, but Assaf mentioned that as regulations like the Corporate Sustainability Reporting Directive take off in the European Union, small to medium-sized businesses will have more pressure to order their ESG reports, creating opportunity for Novisto.

However, he doesn’t see the company straying too far from their niche markets, which comprise financial services, banking, insurance, tech and health, with customers like Sanofi and Moderna.

“That's where we kind of started and we kind of built some form of I'd say, like a niche and these verticals,” Assaf said. “It's not to say that we don't have companies using Novisto in other sectors, but these are the ones that we've seen success, and we (are) focusing on.”

“We have a very, very clear ambition to become the leading enterprise software in the ESG data management and ESG software category in general,” he said.