Sustainable and Impactful Startups - The Next Frontier

I was never a "Scrabble" nerd (to all you Scrabble aficionados...forgive my ignorance!), however, while scrolling through Pexel, the simplicity of the Scrabble cover image above and the duality of the message grabbed my attention.

In my line of work, I get to do a lot of research, attend a lot of startup demo days, and receive a lot of pitch decks from hopeful startups each month. I am therefore excited to share with you an increasingly vital and compelling trend in the startup world - the rise of sustainable and impactful startups.

We have witnessed a significant shift in consumer preferences and investor mindsets in recent years. People are becoming more conscious and aware that their personal (and corporate) consumption patterns and choices can either have a positive or negative effect on environmental and social impact. As a result, startups that prioritize sustainability and social responsibility are gaining traction like never before.

The Growing Importance of Sustainability in Startups

As an angel investor, it is crucial to recognize this shifting landscape and identify startups that align with #sustainable principles, as they have the potential for long-term success and positive societal impact.

?

I’m seeing this trend embedded in every facet of my business ecosystem.

#Accelerators: Some accelerators have changed their whole programme focus and now use sustainability as their primary filter.

One example of this is StartupBootcamp’s Sustainability Accelerator. ?A program designed to empower sustainability startups & scaleups. They see the following advantages for Startups - Connecting visionary Founders with conscious global corporations, their corporate leaders, as well as experienced mentors and impact investors. And equally, they see advantages for investors who engage with the startup cohort - Startupbootcamp Sustainability will invest in 30 of the most promising startups and scaleups from around the world that focus on creating a more sustainable planet. The Startupbootcamp Fundraising Process is aligned with the highest levels of regulation and protection, thanks to our partnership with NxChange.

Startup Competitions: In Egypt, Amideast and Boeing teamed up to host the 2023 STEM for Sustainability competition in Cairo on May 12, 2023. The competition aimed to support Egypt's green transition by investing in the country's growing young population and empowering start-ups and young entrepreneurs.

The competition provided a platform for young Egyptian entrepreneurs to showcase their innovative business ideas aimed at addressing community and global environmental challenges. 36 entrepreneurs representing 12 startups entered the competition. The finalists were assessed by a panel of four volunteer mentors who are experts in entrepreneurship, sustainability, and science, technology, engineering and mathematics (STEM) disciplines.

Startup Cohort Business Models: Brinc, a leading venture accelerator with a focus on sustainable entrepreneurship and innovation, announces the launch of Co-Founder, an AI-powered Google Chrome extension to guide pre-A-through growth stage businesses to understand blind spots and accelerate through personal & company developmental milestones.

In addition to creating value for shareholders, sustainable businesses also tend to be more efficient and thus more profitable. They often have lower costs associated with energy, water, and waste because they have adopted practices that help to conserve resources. They also often have higher employee productivity and morale due to factors such as improved working conditions and a commitment to social responsibility.

Sustainable businesses also tend to be better positioned to weather economic downturns. This is because they often have a more diversified customer base and a stronger reputation. In addition, sustainable businesses often have lower levels of debt and are therefore less vulnerable to financial shocks.

Research (Science) Labs: As the impacts of climate change have become impossible to ignore, sustainability has taken on a new sense of urgency for governments and organizations worldwide, with many pledging their commitment to drastic change; the science industry and lab sustainability are not exempt from this movement. Globally, laboratories generate an estimated 5.5 billion kilograms of plastic waste per year and consume up to five times more water and ten times more electricity than similarly sized office spaces. ?In response, there is a growing push towards lab sustainability, with researchers and lab managers seeking innovative ways to reduce waste, conserve energy, and minimize their overall impact on the environment.

Startups Addressing Global Challenges

Danielle Southcott, Founder and CEO of Veer Group, is building the world’s first clean container ships that eliminate the use of fossil fuels by combining innovative sail designs and #greenhydrogen and stands to steer the ocean transport industry in an entirely new direction, headed straight for purpose and sustainability.

?

In edition one of my Newsletter, I introduced Steve Berrow. Steve has made it his life's work to invent clean energy solutions, and now he is on the cusp of a truly revolutionary breakthrough. The Berrow-Zeice hydrogen fuel system is a unique hydrogen-powered fuel system that can be applied to any of the over 2 billion petrol and diesel internal combustion engines currently in use worldwide. It offers a “#100percentfuelburn” to the engine, which provides greater efficiency for drivers than other current zero-emission solutions, potentially reducing carbon emissions worldwide.

?

Startups such as Universal Hydrogen are pushing incumbent legacy companies such as Airbus to convert to #carbonneutral fuel sooner rather than later.

?

Ingrid Carney, founder of Ingrid+Isabel, sees too much waste in the apparel industry. She wants her business to be different — good for moms and good for Mother Earth.

While pregnancy is nine months, Ingrid Carney believes maternity wear can and should last much longer. She’s on a mission to educate consumers and evolve their buying habits — creating comfortable, quality clothing that can be worn longer, “with or without a bump.”

“We design, produce, and sell ‘things,’ but we’re aware of our output,” says Ingrid, who founded the company in 2003. As Ingrid+Isabel has grown — the popular brand is in Target and other department stores — Ingrid has strived to limit her business’s environmental impact. “Americans dispose of about 12.8 million tons of textiles annually,” says Ingrid, who wants to help women keep more clothing in their closets … and out of landfills.

?

Bene Bono, a French-based food waste startup, has recently raised €7M in funding to fuel its mission to combat food waste.

The company operates a unique business model, saving organic fruits and vegetables that supermarkets reject for aesthetic reasons. They offer them to consumers via a subscription model, creating a direct link between organic farmers and consumers. The company will use the funding to expand into Barcelona.

The startup has identified an intersection between #reducingfoodwaste and fulfilling consumer needs and has innovated by repurposing organically grown produce usually rejected by supermarkets due to their aesthetics.

An additional layer of innovation is in their pricing model, offering these fruits and vegetables at approximately 30% cheaper than the standard market price. This creates a unique value proposition that aligns with the increasing consumer interest in sustainable and affordable food options.

Connecting organic farmers and producers directly to the consumer is a great and innovative approach. This direct distribution model not only ensures that all harvested produce finds a market, reducing food waste but also fosters relationships between consumers and producers, supporting local agriculture.

?

#Sustainablestartups are not only contributing to environmental causes but also tackling significant global challenges. These companies are finding innovative solutions to pressing issues such as climate change, poverty, and access to quality education and healthcare.

?

One sector where sustainable practices have evolved quickly is Agriculture. In an in-depth study by McKinsey, they found Agriculture is a key consideration in global sustainability efforts: agricultural land accounts for half of all habitable land worldwide and 70 per cent of freshwater withdrawals. Reaching a 1.5 degrees Celcius pathway will require changes that extend well beyond the farm, according to McKinsey partner Vasanth Ganesan and coauthors. ?Their takeaway was that sustainable food production, reducing food waste, and changing dietary practices may help achieve decarbonization goals while also meeting global food needs.

Impact Investing: Doing Well by Doing Good

impact investments

im·pact in·vest·ments

NOUN: Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.

Impact investing is gaining momentum as investors seek financial returns alongside measurable social and environmental impact. This approach allows investors to support startups that align with their values while generating positive returns on their investments.

The GIIN estimates the size of the worldwide impact investing market to be?USD 1.164 trillion,?marking the first time that the organization’s widely-cited estimate has topped the USD 1 trillion mark. The figure, which is the central finding of the?GIIN’s 2022: Sizing the Impact Investing Market?report, reflects an increasingly comprehensive measurement of impact assets under management globally.

The report, which was produced with the financial support of?Nuveen,?also spotlights two areas of development in the market that are becoming increasingly prevalent: green bonds and corporate impact investing.

Embracing Sustainability as an Angel Investor

As #angelinvestors, we have the unique opportunity to support startups that prioritize sustainability and social impact. By integrating environmental, social, and governance (#esg) factors into our investment decisions, we can foster a positive change while reaping the rewards of successful ventures.

?

Although Startups in this space will need large infusions of capital to scale, that capital is more likely to become available if the Startup has validation not just in their traction numbers, but also because they can show that a group of Angel investors believed in them and took some early stage risk.

?

All of my angel investments from 2020 onward were made through an impact lens, and I’m still in the process of attempting to raise US$50M for my first Venture Fund, which will be investing in Startups that have created a solution to one or more of the 17 UN #SDGs.

?

Impact Startups that I’m already involved in: https://180.works/, https://kodgav.co.uk/en-gb/home, https://terranindustries.com.au/, https://www.lulupack.com/, https://www.infinitypointcdfi.org/

?

Impact Accelerators I’ve had a long association with: https://creatella.org/

?

Here’s the crazy thing. As any founder of an impact-focused knows, apart from impact-focused accelerators like Creatella that I mentioned above, it is hard to find and join/subscribe to an investor platform comprised of Angel investors with a declared impact focus. This means that it’s equally difficult as an Angel investor to secure access to Impact Startup deal flow, as well as Impact Angels to network with and potentially syndicate investments with.

?

It's an opportunity for an entrepreneur reading this Newsletter to consider jumping in and doing…!

Conclusion

The future of startups lies in their ability to address global challenges while maintaining a commitment to #sustainability and #socialimpact.

?

Not every industry is able to make wholesale changes or flick a switch overnight to become 100% sustainable. However, it is inevitable that industry by industry, market by market, country by country, strategic partners that Startups need to survive, be that investors, banks, insurance companies, other service providers, and yes, even the providers of labour – i.e., future team members, are all going to assess a Startup's sustainability and impact (ESG) credentials (as opposed to what they write about themselves) before they do business with them.

?

As angel investors, we should take a proactive role in shaping this future by supporting and nurturing the growth of sustainable and impactful startups.

Thank you

Thank you for being a part of our community, and I look forward to sharing more insights with you in the upcoming newsletters. If you have any questions or would like to discuss potential impact investment opportunities, feel free to reach out.

?

Best regards,

James

?