2019 saw a huge spike in investment into European tech companies that are seeking to solve some of humanity's most pressing problems.
We partnered with Dealroom to try to quantify this trend and identify the growing universe of purpose-driven venture-backed European tech companies.
To do so, Dealroom created a framework to assess venture-backed European tech companies based on their alignment with the United Nations Sustainable Development Goals.
In this first iteration, the analysis focused on a subset of seven of the seventeen Sustainable Development Goals, selecting only those where Dealroom.co has observed greater levels of European venture-backed startup activity. For each of the selected SDGs, Dealroom manually assigned keywords used to tag companies in its platform to search for and identify a first set of potential companies for review.
The initial results set was then manually reviewed by Dealroom analysts to evaluate the companies for fit against one or more of the SDGs and assign them to those SDGs accordingly.
Additionally, Dealroom's team also manually differentiated all companies in the dataset based on whether the purpose-driven impact of the company was ‘core’ to the business model, or a ‘peripheral’ or indirect component of the business model.
Only companies where the purpose-driven impact was considered core to the business model were included in the final dataset and analysis. In total, the analysis identified 528 unique venture-backed, purpose-driven tech companies. The full list can be accessed on Dealroom's platform here.
We understand the methodology has limitations and see this as a first attempt to seek to build a more robust analysis of European purpose-driven tech companies. We welcome feedback and will update this work both in terms of scope and methodology in future iterations.
This also comes across in the Sustainability/Climate change and Cleantech narrative in Europe, where nearly 50% of all news are focused on tech startups and VC investments.
This year the number of purpose-driven European founders who have pitched to us has been overwhelming. European founders have the most powerful tech toolkit in history, and they are stepping up to help solve some of the world's most pressing challenges such as the climate crisis and healthcare. In doing so they will build huge commercial successes, the global category winners of tomorrow. I believe companies who are purpose driven will outperform the companies who are not. Being mission-driven makes business sense. Many consumers - specifically younger consumers - would rather pay more for something that's sustainable. Younger employees want to work for companies with a mission, and they will leave companies they think are doing things that are negatively impacting society or the environment.
At Healx we believe every rare disease patient deserves a treatment. It's this belief which drives us to achieve our mission of taking 100 new treatments towards the clinic by 2025. Having such a clear mission also helps with recruiting and retaining the best and brightest talent. For the team here, there's no bigger motivator than knowing you're applying your skills to improving the lives of patients, their carers and their families. This is especially the case for the many team members who count either themselves or a relative amongst the 400 million people worldwide living with a rare disease.
Ÿnsect is a mission-driven company from Day 1. It is right in our DNA, as we came from an activist non-profit association. We see more and more projects and entrepreneurs looking to have an impact, to have a purpose, with great ideas showing that profits and impacts can be compatible. Amazing companies like Olio, NorthVolt, OpenClassRooms or Doctolib demonstrate that Impact Unicorns won’t be a myth! Europe could become the best place for 'tech for good' companies, which will have tremendous positive economical and social impacts in Europe and beyond, as 'tech for good' generally addresses humankind's most important needs, which means the largest markets.
Consumers are becoming increasingly values-driven in their lifestyles and this in turn affects how they spend their money. Consumers will look for businesses with values similar to their own, whether that's how a company improves its environmental impact and treats workers in their supply chain or the way it works within its local community. While much of VC is still focussed on areas like Enterprise Software and Fintech, there are significant market opportunities in areas that tackle global issues like efficient energy, sustainable consumption and health and social care. A significant part of our own portfolio is in life sciences and digital health and clean growth, mobility and transportation. Not only are there social positives from investing in these types of companies, there are also potentially very large commercial returns available both for VCs and LPs.
We owe a great debt to the Berlin community who received us and welcomed our vision to challenge the status quo in how we transport, plant and harvest produce in cities. However, at heart, we think of ourselves as an international company serving an international community. Over the next several decades, we’ll need a diversity of talent, perspectives and creativity to truly contribute to a system of urban food production that is sustainable and effective for cities around the world. We are all trying to tackle global problems - I believe this lends particular importance to thinking of ourselves in a global way.