What does the global impact investment market look like? Amsterdam-based data startup Dealroom crunched the numbers to find out what industries, which companies, and which VCs you should keep an eye on.
From location to last investment round and from valuation to growth stage: if you are looking for data about startups, information about the number of exits a VC has made or their portfolio size, Amsterdam-based data startup Dealroom has got you covered.
Dealroom’s clients include VCs looking for new investment opportunities and startups trying to find out what investors are out there, but also municipalities and cities wanting to get a better view of the economic development and startup ecosystem in their city.
Numbers alone don’t tell the whole story. Dealroom also offers a deeper dive into the impact tech ecosystem. “Doing good and making money are more connected than ever before,” Matteo Renoldi, impact specialist at Dealroom said.
To strengthen this statement, the company has made a report about the global impact investment market, which will be released during ImpactFest on the 4th of November.
SDGs as impact measurement
To measure impact Dealroom uses the Sustainable Development Goals (SDG) the United Nations created in 2015. Within the framework of goals like health and wellbeing, gender equality and affordable and clean energy, Dealroom reviewed publicly disclosed information like business models, mission statements, and case studies of over 8,000 startups globally.
This methodology is susceptible to greenwashing, Renoldi acknowledges. “There are clear limitations on the quantity and quality of publicly available information. Companies are often small, they don’t share a lot of information and there is no one way of reporting impact.”
The company opted to use the SDGs despite this for reasons of scalability. “By using the SDGs Dealroom is able to compare thousands of companies to give a global view on impact. If you work with open access data, this is a good starting point.”
Energy, transport and food attract the most impact investments
Looking at the numbers it’s safe to say the market is booming globally. In 2016 impact startups worldwide raised €7.7bn; in 2021 year to date €39.5bn was raised, a quintupling of investment capital. “The year hasn’t even finished, but impact investments have already doubled compared to last year,” said Renoldi.
Globally most of the money invested in impact goes to companies that work on SDGs climate action (€22.6bn) and clean energy (€12.3bn). Responsible consumption, sustainable cities and infrastructure make up the rest of the top five, all with investments between €5 and €6bn. This corresponds with impact investment flows to the energy sector of €15.9bn, transportation of €14.8bn and the food sector of €7bn.
The US and Canada, and Europe plus Israel are key players, with respectively €22.6bn and €12.1bn worth of investments in 2021 so far. Both markets this year have already doubled their invested amount compared to last year.
Within Europe, Renoldi sees some interesting changes. “Before, VCs were more conservative and mostly invested in what they know. But to find the next great deal they are slowly but surely discovering alternative regions.”
He points to Central and Eastern Europe as an example. “Before, investors were mostly focused on startups in the North and Western part of the continent, but companies like second-hand fashion app Vinted from Lithuania, which raised €250mn this year, are showing that this region is up and coming.’
Within Europe, Sweden stands out when it comes to impact investments. The Scandinavian country is only in fifth place in Europe when it comes to overall investments in start-ups but of its €6.7bn in investments, €3.6 billion is invested in impact. The UK, Germany, France, and The Netherlands make up the rest of the European top five.
According to the report, capital flows into impact in The Netherlands amount to €654mn in 2021 year-to-date, compared with €531mn in 2020. Transportation, energy and sports are the most invested industries, the latter mostly pushed by electric bicycle scaleup VanMoof.
There are 557 Dutch companies in the report, varying from big names like Fastned, Sungevity, EVBox, and Mosa Meat to upcoming players like Black Bear Carbon, SkinVision, and Fairphone.
“In many markets, you see that ultimately there are only a couple of big players that survive. If you have a lot of small companies that together make a huge impact, there is a big chance they will flounder,” said Renoldi.
To prevent this, Renoldi states, it is important companies work on their scalability. An example is VanMoof, according to Renoldi. The Amsterdam-based bicycle maker recently raised $128mn to make its high-tech e-bikes the new standard in cities worldwide. “The company ticks a lot of SDGs and is scalable. This is definitely one to watch.”
Do you want to know more about the Dealroom Report? At Impact Fest, 4 November, they will give a presentation with the key takeaways of their impact report.