Start-ups that support sustainable causes raised a record £2 billion in 2021, a major study has revealed.
The research, published by Dealroom for the UK’s Digital Economy Council, highlights the success of ‘impact’ firms, defined as those founded to “build solutions to the United Nations’ Sustainable Development Goals”.
The 17 goals include “good health and wellbeing”, “quality education”, “clean water and sanitization”, “affordable and clean energy”, “decent work and economic growth”, “industry, innovation and infrastructure”, “sustainable cities and communities”, and “climate action”.
According to the analysis, investment in the impact sector has increased by some 127 per cent in the UK since 2018. And in 2021 alone, impact startups raised a record £2 billion, up from £1.7 billion the year before.
The report also reveals that there are now 900 impact startups and scale-ups in the UK, with 12 of those – Arrival, Octopus Energy, Babylon, ITM Power, Ceres Power Holdings, Vertical Aerospace, Compass Pathways, Depop, Ovo Energy, Britishvolt, Tractable, and BenevolentAI – worth more than $1 billion (£750 million) in value.
Within the impact space, climate tech is by far the biggest industry, accounting for 65 per cent of the deals recorded in 2021. Climate tech also recorded the biggest deals by value, which includes the £438 million investment round in green energy provider Octopus Energy, and the £130 million Series B round in electric car subscription platform ONTO.
Commenting on the study, Luisa Alemany, associate professor of management practice in strategy and entrepreneurship at London Business School’s Institute of Entrepreneurship and Private Capital, said: “Impact investing has come a long way since its start in the late 90s when it was considered more of a philanthropic endeavour until investors realised these investments could deliver not only a social benefit but also a financial return.
“At the heart of this is technology, as the way to scale social impact is by applying science and technology. From biotech to nanotech, cleantech, computer science and medicine, technology is not only improving our lives but finding solutions to these pressing problems that only entrepreneurs, with the right source of financing, can dare to solve.”
Digital Secretary Nadine Dorries added: “From world-class AI discovering new treatments for Covid-19 to green energy solutions paving the way to a net-zero future, UK tech is transforming the world for the better.”
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