Last week, during the SuperVenture event in Berlin, our friends from the European Women in VC launched their report on how venture and growth investing fuel sustainability and societal change.
The report is backed by a survey answered by more than 300 European VC Partners and LPs, cementing a continuous and growing interest in impact investing and bringing more diversity to the ecosystem.
Key findings:
More VC money is going to European positive impact-driven startups than ever. From €53B raised by European tech startups in 2023, 1/3 was done by positive impact startups
LPs are especially motivated by the desire to make a positive environmental impact in their investment decisions.
Improving ESG performance is a top priority for 1/2 VCs over the next 12 months.
87% have already implemented an internal ESG policy or plan to do so in the next year.
There is a strong belief that increased diversity in venture leads to better investment decisions and financial returns – and this is translating into action.
Superior returns, personal values, and the will to change the world are driving forces in the VC industry.
2024 - the year of sustainability in venture
Europe's venture capital landscape experienced serious changes recently, with positive-impact startups emerging. In 2023, a remarkable 1/3 of the €53B invested in European tech startups went towards companies directly addressing UN Sustainable Development Goals (SDGs).
The commitment to social and environmental good extends beyond just numbers.
VCs are increasingly using the UN SDGs as a guiding principle, with a strong focus on climate action. The trend is particularly striking in the Nordics, where a staggering 61% of the €7.9B VC investment in 2023 went towards impact startups. This represents more than double the percentage of other European regions, showcasing a deeply embedded focus on positive societal change.
Overall, these figures paint a picture of a golden age for VC investors who prioritize aligning financial returns with creating a better world.
Investment in European climate tech startups has tripled in just three years, highlighting the growing momentum behind sustainable solutions. With a more than doubled commitment to impact investing by VCs in Europe over the past five years, the landscape is ripe with exciting opportunities for investors seeking to make a positive difference.
VCs & LPs prioritize climate and gender equality.
The UN Sustainable Development Goals (SDGs) have become a guiding framework for many investors, directing capital towards industries with a positive social and environmental impact.
Environmental concerns are now a top priority for 60% of European LPs. One-third specifically cite reducing a carbon footprint as a key factor when choosing a VC fund, demonstrating a growing commitment to sustainability.
This trend is reflected in the fact that 28% of VCs plan to seek out new ESG investment opportunities, and 23% aim to increase the number of ESG-aligned companies in their portfolios. Interestingly, these priorities extend beyond just environmental issues. Diversity and inclusion are also a major focus, with 38% of VCs reporting that increasing partner diversity is a top goal.
LPs quickly translate these priorities into action by implementing robust ESG tracking and policies. 60% of the LPs surveyed have adopted or plan to adopt an ESG strategy to guide their investments. This strategy often requires portfolio companies and VC funds to report on their ESG performance (65% of LPs).
However, the lack of a universal ESG framework presents a challenge, particularly for smaller VC funds. Standardizing these metrics would make tracking and reporting easier, potentially attracting even more capital toward climate-focused ventures.
More diversity. More returns.
VCs and LPs also recognize the value diversity brings in attracting a wider range of talent and fostering a more collaborative work environment, as well as significantly more returns for their portfolio.
87% of the VCs and LPs surveyed say that increased diversity in venture capital leads to better investment decisions and financial returns. One in two believe that increased diversity in VC leads to significantly better investment decisions and financial returns.
Discuss diversity in European venture with us.
On July 5th, we are meeting with a series of powerful ladies from our ecosystem to discuss diversity, how to empower more women to join us, and how to drive innovation.
Ralitsa Zhekova - Executive Director at RAPIV
Deepali Nangia - Partner at Speedinvest
Iwona Cymerman - GP at Funding Box
Jone Vaituleviciute - GP at FIRSTPICK
Our topics of discussion on the table are:
Inclusive innovation policies: Unpack the essentials of crafting policies that promote gender balance and inclusivity within the innovation ecosystem.
Empowering women in innovation: Delve into the transformative strategies and best practices for supporting women's active participation in innovation.
Dialogue among investors: Hear directly from investors on the importance of gender balance and inclusivity and how it shapes the future of investment.
The power of women investors: Discover how to empower and engage women investors, encouraging their leadership and active involvement in shaping the investment landscape.
This event is a part of the CO-INVESTIN project, focusing on understanding and improving European investment ecosystems.