VC Funding May Be Down, But Here’s How Impact-Focused Startups Can Score Big

By Eugene Krasicki 

As global startup funding experiences a downturn, with Q1 2024 marking one of the lowest points since 2018, the landscape for entrepreneurs seeking investment has become increasingly challenging.

In these uncertain times, investors are placing greater emphasis on startups that offer tangible solutions to pressing societal and environmental issues. As a result, sustainable startups in this climate have a unique opportunity to shine by aligning their missions with the growing demand for impactful investments.

That said, standing out from the competition requires more than just a noble cause. Founders must carefully consider what sets their venture apart and how they can effectively communicate their value proposition to impact investors.

Let’s go over the key factors that stand to attract investment in sustainable startups and lead to success.

What are impact investors looking for?

Startups that can demonstrate a strong alignment between financial viability and positive social or environmental effects are in great demand in today’s investment landscape.

To appeal to investors, projects must clearly articulate their objectives, showcasing how the two aspects (financial and environmental) are interconnected in their operations. By presenting a compelling narrative that highlights the potential for both financial returns and positive social or environmental change, startups can effectively capture the attention of impact investors.

Taking this logic a step further, participating in impact-focused grants and accelerators can provide startups with not only much-needed capital but also increased credibility within the impact investing community.

Such platforms offer valuable opportunities to showcase a startup’s commitment to creating meaningful change while also building relationships with like-minded investors and fellow entrepreneurs.

Additionally, actively engaging in forums and networking events frequented by impact investors can greatly enhance a startup’s visibility and access to funding opportunities. By joining these communities, companies can gain valuable insights, receive feedback on their strategies, and forge connections with potential investors.

Lastly, startups should establish clear mechanisms for measuring, monitoring and reporting on their impact performance to ensure transparency and accountability. Regularly sharing detailed updates on both impact and operational metrics is essential for maintaining investor trust and confidence.

Which categories are poised to grow in 2024?

In 2024, the landscape of sustainable startups is poised for significant growth, driven by an increasing consumer preference for eco-friendly products and a heightened awareness of environmental issues.

One field that I expect will experience significant growth is renewable energy startups. As the global transition from fossil fuels gains momentum, interest in solar and wind energy technologies continues to soar. Startups in this space are well-positioned to capitalize on the growing demand for clean and renewable energy sources.

Another area of interest is electric and autonomous vehicles. With the automotive industry undergoing a profound shift toward sustainability, startups focusing on innovations in autonomous driving technologies are particularly attractive to investors.

These startups are driving forward the green revolution in transportation, offering solutions that reduce emissions and minimize environmental impact.

Lastly, climate tech startups are emerging as key players in the fight against climate change. From carbon capture technologies to climate resilience solutions, these startups are developing innovative ways to mitigate the impacts of climate change and build a more sustainable future for generations to come.

As investors increasingly prioritize environmental and social impact alongside financial returns, the outlook for sustainable startups in 2024 is bright and promising.

Eugene Krasicki is a founder and CEO of neobank Keytom, which aims to be one bank for all digital assets. An impact entrepreneur with over 15 years of expertise, he has paved his path through various industries from manufacturing and fine wine to real estate and banking. Beyond his entrepreneurial pursuits, Krasicki has a deep interest in alternative investments, recognizing their potential in diversifying portfolios and generating long-term returns.

Illustration: Dom Guzman