Why I am betting for Impact Tech Ventures in 2024

Written by: Andrea Monti

The impact and sustainability startup ecosystem is becoming more and more a dynamic and rapidly evolving landscape, where technology and innovation are driving positive social and environmental change. The Impact Investment market was recently estimated at 1.2 Trillion: the industry has evolved significantly and continues to mature in a world that has not fully recovered yet from the COVID-19 pandemic and is still fraught with social tensions, climate crisis, and inequities (economic, social, gender and racial).

Let’s remark here what we mean for Impact Investments: Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.

Looking at the investment in startups only, while in 2022 they decreased less than investments in traditional startups, estimates for 2023 are showing more similar negative trends between Impact investments and “traditional” investments in Ventures (source Dealroom):

Notwithstanding this, few events are showing more and more opportunities and demand signals for inspired, Impact entrepreneurs, and the outcomes of COP 28, where nearly every country in the world has agreed to “transition away from fossil fuels” — the main driver of climate change — are there to show that change is possible and might be embraced together, globally.

In this context, from one side we should worry because of slower impact investments, in times when Sustainable Development Goals are slipping out of reach: none of the 17 SDGs is on-track to be achieved by 2030.

On the other hand, though, billions of new funds have been raised in last two years, and a lot of dry capital is still available. On top of that, Impact entrepreneurs’ ability to achieve different funding sources than VC might be above average in the next years, thank you to public programs and other sources of fundings. See for example what is happening in Climate tech:

That’s another reason of why also “traditional” Investors are looking more and more into Climate Tech companies and Impact Tech Ventures in general: Impact Tech Ventures make profits, while, solving some of the big challenges of today’s world, so the dichotomy of impact vs. non-impact could soon be no more valid.

But is investing in Impact Start-ups different?

Not necessarily. Investors have specific thesis and objectives they want to see obtained by the targets they invest in:

• For individuals and LPs of a VC fund, equity investments are usually the most risky part of their portfolio: they accept some risk in exchange of returns above other asset classes, whether they are impact or non impact ventures;
• Investors have a specific vision about the industry they are investing it, to boost it or gain from its current growth: if an Impact Venture is disrupting that industry, it could be a good target;
• Angels also might have a “social” objective: make them feel that they are contributing to society with tech and Impact.

So why should we care about Impact Ventures?

Startups play a crucial role in driving innovation and solutions to social and environmental challenges. They are often at the forefront of developing new technologies and business models that address these challenges while also generating financial returns.

The impact and sustainability startup ecosystem is poised for continued growth and innovation. The convergence of impact investing and ESG investing is creating a more holistic approach to responsible investment, where both financial returns and positive social and environmental impacts are considered.

As investors, policymakers, and entrepreneurs work together, the impact and sustainability startup ecosystem has the potential to play a transformative role in addressing global challenges and building a more sustainable and equitable future.

Additionally, the learning and improvements in measuring the Impact produced make Impact startups more and more credible: accurately measuring and tracking the impact of investments is essential for both impact investors and ESG investors, and the development of standardized impact metrics is crucial for consistent and comparable measurement.

By embracing these practices, the impact and sustainability startup ecosystem can continue to advance and contribute to a more just and sustainable world and attract even more funding.

I had the privilege of working with some of such changemakers, and they are at the forefront of financially sustainable businesses creating long lasting Impact, here is some name to look at:

• TotalCtrl's vision is to revolutionize the food industry by eliminating food waste, increasing food traceability and ensuring a circular food system. The company has developed an award-winning technology (35 awards in 4 years) replacing the use of pen & paper to get control over food inventory (bridging the cap between procurement and sales).
• Earthly connects businesses to high-quality nature-based solutions that remove carbon, restore biodiversity & support local communities. The company’s platform uses data and machine learning to help businesses reduce their carbon emissions and improve their sustainability. This could help to address the climate crisis and create a more sustainable future for everyone.
• SatSure is a company that is developing a new way to monitor and manage crops using satellite imagery. The company’s platform uses AI and machine learning to analyze satellite imagery and provide farmers with insights into their crops. This could help farmers to improve crop yields, reduce water usage, and increase profitability.
• Inuka Coaching is a company that provides personalized coaching services to individuals and teams to help them achieve their goals. The company’s approach focuses on helping people develop their strengths and overcome their challenges through a combination of coaching, mindfulness, and self-awareness exercises.
• Digipharm facilitates outcome-based healthcare contracting using Blockchain, AI and associated technologies, providing solutions for healthcare providers and patients to improve access to medical services and improve patient outcomes.
• Munidigital is a company that provides digital solutions for municipalities to improve their operations and services. The company’s platform offers tools for citizen engagement, online payments, and data analytics to help municipalities become more efficient and responsive.
• Revisely is an AI-powered writing assistant that helps professionals improve their writing by providing real-time feedback and suggestions. The tool analyzes grammar, style, and clarity, helping writers to produce clear, concise, and error-free content.

About the Author:

Andrea Monti is a Director at the Founder Institute and ambassador at Top Tier Impact . He is a passionate advisor and change-maker in the Impact Tech ecosystem

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