For those of us that have been watching impact venture capital (VC), it’s hard not to feel a sense of momentum right now.
We’re just a few months into 2021 and we’ve already seen over $600m in fresh capital raised to invest in impact startups.
This includes established impact VCs like SJF Ventures launching their fifth fund totalling at US$175 million, Spero Ventures launching a new US$123 million fund, and Kindred launching a second fund valued at US$100 million. VCs only get to raise second and future funds when they’ve been successful in previous ones, so this is strong evidence that their first impact startup portfolios were sound financial investments.
Perhaps spurred by evidence of the financial opportunity, mainstream VC has also continued its shift towards impact. In Australia, we’ve seen high profile VCs including sustainability metrics in their term sheets. In the US, Union Square Ventures just announced a US$162m Climate Fund, focussing on high growth ventures that directly mitigate carbon emissions, citing the financial opportunity in their launch memo:
The USV Climate Fund is a straight-up venture fund. We believe that decarbonizing the economy and dealing with past emissions (and their consequences), offers many opportunities for building important new companies that can produce venture type returns.
Even Robert Downey Jnr is getting in on the action, announcing a US$50m venture fund arm of the Footprint Coalition. Clearly, there’s something in the air, a growing understanding that startups can be a powerful lever for launching scalable solutions to the world’s biggest problems.
We think this is perfect time to quantify some of the trends of the impact landscape we’ve been noticing in Australia and around the world. To do this, we analysed our own data, trawled public databases, and knocked on some very special doors in our impact network to compile insights into a benchmarking report, which will be released in the coming weeks (for first access, sign up to our Small Steps newsletter).
Given the activity we’re seeing internationally, we couldn’t resist releasing a teaser from the data we’ve gathered.
While Australia’s impact startup ecosystem is rapidly developing, it is still a very small piece of the global impact startup community. To begin understanding the scope and trends of the global impact startup ecosystem, Giant Leap pulled together a database of impact venture funds around the world (see below), which we’re making open-source for founders and investors. The initial search reviewed data sources including Pitchbook and Crunchbase, finding over 480 active funds.
For the purposes of this database an impact VC fund is defined as any fund that has raised new capital in the last 5 years with at least one explicit impact or diversity mandate. If you’ve noticed we’re missing a fund in the database or have any comments, please let us know via this form: https://airtable.com/shrSlw9Z20dlzB6pU
We break down the insights, including fund sizes, in more detail in the benchmark report, but here are some of the high level data points we found…
Much like the broader VC industry, the impact VC industry is dominated by the US. Of all impact VC funds around the world, Giant Leap found more than half of the firms were based in the US. In addition, 9 out of the largest 10 impact VC funds were US-based.
Meanwhile, Europe is overrepresented in the impact market, with European funds managing 29% of global impact VC despite attracting just 16% of global VC as a whole. In addition, European funds had the highest median fund size of any region.
Despite covering some of the world’s poorest and most climate-impacted areas, fund managers in Asia-Pacific attracted just 8% of global impact VC. This compares to attracting 29% of all venture funding in 2020, led by powerhouse venture funds in China.
For our analysis on the data in more detail, check out our Impact Startups Benchmark Report 2021.
Small Steps Vol. 57: Interactive maps of future climate scenarios 🗺️; impact insights from gamers 🎮; and fiction creating reality 📺
Giant Leap's impact thesis for Who Gives A Crap, the sustainable toilet paper company that builds toilets.