Seven London Impact Investors Fuelling Purpose-Driven Startups
Impact investing is on the rise, and nowhere more so than in London. Venture funding into London’s purpose-driven companies has increased by almost eight times between 2015 and 2020, compared to three times in Europe.
Guest writer Dianne See Morrison is a longtime independent tech reporter, co-founder and editor of the Pathfounder. She shares some of the most influential impact focused VC´s in the Big Smoke.
The British capital’s impact startups have raised $1.2 billion in venture capital investment from January to October 2020, a figure that by year’s end is expected to outpace 2019 levels, according to a research conducted by Dealroom.com. The city is now Europe’s largest impact tech hub with some 241 impact startups founded since 2006, compared to 94 for San Francisco, the world’s second largest impact hub.
As the fallout from the Covid-19 pandemic has revealed, the need is more urgent than ever for more purpose-driven companies that can generate a positive, social or environmental impact as well as profits.
Investors are stepping up and while a number of London VCs are making more investments into impact startups, we’ve compiled a list of seven that have made it their focus:
- Bethnal Green Ventures (BGV): Launched in 2012, BGV is one of London’s oldest tech for investors focused specifically on investing in early stage startups driving positive outcomes at scale in four areas that they list as – a sustainable planet, better society, healthy lives and workerTech. In the eight years that it has been running, the fund has backed 127 impact startups, including: LettUsGrow, the indoor and vertical farming tech startup; Chatterbox, the edtech language learning platform, taught by refugees; and ApiaryBook, an app that lets beekeepers manage and monitor their hives. BGV runs its Tech for Good Programme twice a year. Accepted startups receive a £30,000 investment in exchange for up to a 7% equity stake and participate in an intensive 12-week programme of workshops and mentoring. BGV makes follow up investments ranging from to select startups as part of bigger rounds.
- Nesta Impact Investments, a division of Nesta, the UK’s innovation foundation, is a £17.5 million fund aimed specifically at founders tackling major social challenges. They typically invest between £150,000 and £1 million in social ventures. Portfolio companies include Q doctor, a platform that allows video consultations between patients and their healthcare providers; BibliU, a digital e-textbook platform aimed at higher education, and the recently exited Applied, a recruitment software startup which uses behavioural science to eliminate bias.
- Mustard Seed, Founded in 2013, by two former Goldman Sachs colleagues Alex Pitt and Henry Wigan, Mustard Seed is a €31.9 million fund, making seed investments into socially-minded founders in the areas of health, education, environmental sustainability, family and economic inclusion. Notable investments include Indian unicorn Rapido, a bike taxi platform; Winnow, a startup using AI to cut food waste and what3words, the geocode system that encodes geographic coordinates into 3 dictionary words. The fund also works with Portuguese investor MAZE to make investments into European impact startups through its Mustard Seed MAZE accelerator.
- Ananda Impact Ventures. Ananda is technically a German venture fund. But the early stage Munich-based fund has an office in London and has made a number of investments through it. Ananda sees financing as a “shared venture” and an initial investment, usually in the range of €500,000 – €2 million can grow up to a total investment of €7 million over several rounds and stages of maturity. Notable investments include Open Bionics, the robotics company creating affordable, medically certified 3D-printed bionic arms for amputees; Repositive, a platform that enables individuals to access and share human genomic data for cancer research; and Raremark, a platform to share information about rare diseases.
- Ascension Ventures: According to Dealroom.com, seed fund Ascension Ventures is one of Europe’s most active impact investors, participating in deals worth £270 million in the last 12 months. The fund was formerly focused on digital media, but since the launch of its £10 million Fair by Design fund, it has been investing into impact startups. Notable investments include Wagestream, the fintech firm that allows employers to give their staff earlier access to the wages they’ve earned and Credit Kudos, a fintech startup using alternative data for credit scoring.
- ETF Partners: One of the most sizable impact funds, ETF Partners closed its third generation Environmental Technologies Fund in July 2020 on £167 million. It too has been identified by Dealroom as one of Europe’s most active impact investors. The 14 year old fund makes investments from Series A and upward and has made investments into fields including fintech, smart mobility, ethical cybersecurity, microbiome AI and software, and energy efficient data centres. Notable investments include Tomorrow, the mobile challenger bank that promises to only invest customer deposits to finance renewable energy, organic agriculture, microcredits and other sustainable projects.
- MMC Ventures: The 20 year venture capital firm only recently gained its B Corp Status, and was better known for its investment into AI startups. MMC, however, has earmarked a “significant portion” of its current £52 million seed fund to invest exclusively in sustainable technologies and the circular economy. MMC have already backed several sustainable businesses including Qflow, an environmental management platform that tracks, monitors, and predicts project environmental risk; Recycleye, which uses machine learning to track and monitor waste sorting, and Pesky, a transparent marketplace for the seafood trade in the UK.
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The City of Oslo and London Borough of Hackney have had a business friendship agreement in place since 2013 and it's built on common objectives around issues like entrepreneurship, climate change, the smart cities agenda and building an inclusive economy.
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