Introducing: The Collective Im-Pact
Co-written with Anouk Banlier
Why should you be reading this?
Because you want to create a more sustainable world and improve the lives of billions of people. You have the purpose and drive to build, or support companies using technology to have an impact whilst delivering financial returns.
You may be a founder using tech to innovate and scale fast, an investor or potential investor into these companies, or more broadly part of the essential ecosystem of supporters that will help enable this.
Why we’re here
Personally, I have been obsessed with food(tech) and health over the past 20 years, which developed in the last eight years into the realisation of my purpose and mission in life: how we create more sustainable and healthy ecosystems. This includes co-founding two companies and supporting hundreds more hands-on. I thought it was time to start writing and sharing more on these topics, and the broader impact ecosystem, as I started reading more about the catastrophic implications if we do not change the way we live our lives.
What particularly shocked me in the last few years was the disastrous consequences of not improving the quality of our soil and not becoming net-zero carbon¹. I’ve seen the incredible lack of diversity within VCs and early-stage startup founders and, despite the lip-service paid to tackle these issues, experienced first-hand the difficulties myself as a female, ethnic minority. I believe we need better education and infrastructure to support the new way we live and work, which has caused a deterioration in our diets, mental health and overall health. This is why I started looking at how to support the broader impact ecosystem.
Supporting endeavours within the impact space is something I believe is both important and necessary — it is not only our duty but provides a financial opportunity. However, often key areas are overlooked because investors focus on business models they already understand well versus investing the time and energy on innovative new models that look risky at first glance. Nor being truly open to diverse founders with a broad range of backgrounds and experience. So although investors may say they “want to have a positive impact” or “measure ESG” in their portfolio, this is driven largely by demand from their LPs, and potential LPs and to improve their image, versus a concerted effort to deploy capital meaningfully. This is a mistake — and we aim to highlight the opportunities to debunk these long-standing myths, why it’s so important to invest in a broad range of companies focussed on having a positive impact and better support founders in the ecosystem.
We have identified 3 specific key gaps in the current impact ecosystem. It is these 3 areas that we, with your support, want to focus on to increase our collective impact.
The 3 problems to address
Despite the amount of high-quality content produced across the ecosystem²— ClimateTech VC’s Climate investors list, Creandum Team and Speedinvest’s List of European ClimateTech companies, Dealroom’s impact ventures database or their 2021 FoodTech report in collaboration with Five Seasons Ventures as a few recent examples — it has become clear in our deep-dive that there are still several critical challenges:
- Collaboration Gap: For investors and founders committed to the impact sector, networks remain opaque. This means insights often get lost and VCs and founders end up re-creating frameworks and analyses instead of building on each other’s work.
- Knowledge Gap: For mission-driven founders, relevant and trusted knowledge sources and capital are both still difficult to identify, vet and access. For example, is not even easy to understand the top investors in this space, let alone by what “impact” sub-sector they invest in, nor find the right advisors or mentors with the right expertise to guide them in their journey.
- Allocation Gap: For the broader ecosystem, this also means that capital is often misallocated, missing opportunities for outsized impact and returns. One of the most obvious cases of this misallocation is found in Climate Technology: while transportation accounts for only 16% of our global carbon emissions, 63% of all VC ClimateTech capital is directed to this space³. That’s even more striking considering a large proportion of this funding focuses on electric vehicles, which only makes the challenge of clean electricity or energy production more pressing. If we want to have a significant impact, it is important to understand and direct capital into innovation that will truly drive the transition to carbon-free energy⁴.
Setting the scene
In this series, we will discuss impact companies that fall within two broad buckets: ClimateTech and equal opportunity solutions⁶.
We define ClimateTech as all of the sectors working towards net-zero emissions, including but not limited to energy, transport, food and agriculture and the clean and circular economy. US$16.3 billion was invested in ClimateTech ventures in 2019, or 6% of global venture capital⁷.
Equal opportunities include technologies focused on democratising access to basic resources such as health, education, nutrition or energy, but also funds investing in underrepresented founders. Health and education received US$16.8 billion and US$10.8 billion in VC funding in 2020 respectively. Although “financial inclusion” and “diversity and inclusivity” are more nascent fields for VC, it is estimated that 1.7 billion people are excluded from formal financial services (savings, payments, insurance, and credit)⁸ and that over US$ 12 trillion could be added to global GDP through the inclusion of under-represented groups⁹.
While these are not perfect definitions and there will be overlap in these categories, we thought it important to set a framework for our analysis going forward.
We are already in touch with many of the impact VCs globally and a wide range of entrepreneurs, but we’d love to make this as collaborative as possible and engage with more founders, VCs and Angel investors, so please reach out if you would like to get involved. Here are some of the things we are particularly keen to hear your thoughts on:
- As a founder or investor, what are your main pain points in building or investing in impact-focused businesses?
- Which trends and opportunities are you most excited about in impact?
- Which resources and tools — market maps, investor databases, impact assessment frameworks, for example — do you use?
If you have input on any of the topics above, if you would like to be involved in this initiative, or if you are a founder working on an early-stage company, please fill in this form or comment below.
What’s next
We will release a series of events, medium articles and a Dealroom report in the upcoming months to help create transparency, new connections and perform deep dives into sectors and measuring impact. The aim is to not only discuss our, and other impact expert’s views but make this space much easier to navigate for all impact founders and the wider ecosystem by aggregating all of the best research and resources along the way. We will bring together experts across impact for roundtable discussions and then share this thought leadership with the larger community, so we can amplify our impact by working together on the world’s most pressing issues.
If we miss anything, we’d love for you to contribute and send us the most impactful content you’ve come across.
¹ Not to be confused with “carbon neutral” — these are not the same thing: here is a good explanation of the distinction.
² We’ll mention many more in this series of articles. Some others include:
- Wellstreet (Jessica Rameau), Northzone (Pär-Jörgen Pärson) , EQT Ventures and Industrifonden’s initiative to adapt ESG reporting standards to startups.
- Rubio Impact Ventures’ yearly impact report.
- Bethnal Green Ventures’ (BGV) yearly impact + learning report
³ That being said, transport is certainly a huge and necessary challenge to tackle: it is the first source of emissions in the US, and the fastest-growing source of emissions globally with a 71% increase since 1990. PwC, The State of ClimateTech 2020.
⁴ For more on this, and a great overview of the challenges and opportunities, we highly recommend Bill Gates’ How to avoid a climate disaster (Gates Foundation)
⁵ PwC, The State of ClimateTech 2020. Bill Gates’ How to avoid a climate disaster
⁶ Although important, we won’t cover the last two UNSDGs here. If you want to learn more we recommend reading Regulatory Hacking by Evan Burfield
⁷ PwC, The State of ClimateTech 2020.
