The State of Impact Startups & VCs in 2022

Are impact startups recession-proof? Once again for ImpactFest, we check in on the state of global impact startups, in partnership with ImpactCity, Tech Nation and Danske Bank.

Report - Impact Startups 2022

How big is the impact innovation ecosystem?

The sheer size of impact tech may be a surprise to some – the combined value of impact tech companies is over $2T. While the total value of these companies has fallen slightly in 2022, the ecosystem includes public companies, which have been exposed to volatile markets this year. Nevertheless the ecosystem has grown 64% since the ens of 2020.

Impact startups raised a record $68B in 2021. While not reaching the highs of 2021, 2022 has already surpassed 2020 with $35B raised and impact startups are now worth a combined $2.3T.

And that growth is being seen on a smaller-scale as well as more success stories pop up in the sector. Where other sectors struggled to maintain the momentum from 2021 in terms of Unicorn creation, 200 impact companies founded since 1990 have become unicorns, 26 of which became unicorns in 2022.

Europe, where investors go to fund impact

Europe is the region with the highest share of impact funding as a total of VC investment at 18% followed by the US (8%) and Asia (4%). However, the US attracts the highest amount of impact funding ($69B) compared to other geographies and just a bit higher than European investment ($35B).

European impact startups are however catching up with the US on VC investment. 2017 to 2022 YTD growth of impact VC investment per region saw Europe grow by 5.5x compared the US growing at a rate of 3.0x. And in terms of Unicorn creation, Europe has created 34 new future unicorns in 2022, only 4 less than the US.

The Dutch cities creating the most impact tech jobs

Impact startups provide 10% of the startup workforce in the Netherlands. South Holland and Brabant are the most impact intense regions.

On a city-level Arnhem, Maastricht and The Hague are the most impact intense cities. By percentage of startup jobs at impact startups by city, Arnhem leads with 32% of it’s job pool, followed by Maastricht at 29% and The Hague at 28%.

Investing in Sustainable Development Goals (SDGs)

Startups tackling the Climate Action and Affordable and Clean Energy UN SDGs combined raised $129B+ since 2017. Climate-related SDGs attract, by far, the vast majority of impact investment. Popular industries like Electric vehicle battery and solar energy are the most funded segments in the energy transition scene.

While startups addressing people-related UN SDGs such as Life below water, and Decent Work and Economic Growth, are some of the most underfunded, they are also the fastest growing. Climate-related SDG startups may become over-saturated by competition in the future, whereas people-related SDG startups have untapped investment opportunities with the potential for high returns.

Report - Impact Startups 2022

For more on ImpactCity, check out our latest Ecosystem Spotlight, where we sat down with the company to discuss The Hague’s unique impact tech ecosystem, ImpactCity’s outreach strategy for both local and international collaborations, and what challenges they’re looking to solve in the next five years.