UK ‘impact’ startups gain £2bn firepower in 2021, driven by climate tech sector

Impact startups in the UK – defined as those founded to actively build solutions to the United Nations’ Sustainable Development Goals – have raked in £2bn in investment this year, according to a new Dealroom analysis.

As investors grow increasingly wary of corporate greenwashing, so-called “impact investing” in companies that are founded to generate positive social and environmental impact alongside financial returns is on the rise, and has surged 127 per cent since 2018 in the the UK.

Startups actively working on producing new renewable energy technology, or more eco-friendly packaging, are examples of those that fall under this definition.

The UK now boasts almost 900 such startups and scaleups, and investors poured £2bn into their growth this year, up from £1.7bn in 2020, the data shows.

Startups innovating in artificial intelligence, deep tech, big data and blockchain now have a combined networth of £50bn in the UK, and provide over 35,000 jobs, according to the new analysis.

Climate tech is the key driving force behind these figures, and made up 65 per cent of deals in the impact space, including green energy provider Octopus Energy’s £438m fundraising round in September, and EV subscription platform ONTO’s £130m Series B round in July.

Climate tech investment is booming in London, where separate Dealroom data shows the combined value of startups in the sector has almost tripled in the last year to $28bn – ahead of rival tech hubs in Europe and beyond.

And according to the new analysis, which was commissioned by the UK’s Digital Economy Council, the UK is now home to twelve impact unicorns – worth over $1bn. These include EV manufacturer Arrival, pre-loved fashion marketplace Depop, and digital health startup Babylon – all three of which hail from London.

Looking to the future, Dealroom estimates that there are 22 impact “futurecorns”, whose high growth puts them on track to reach unicorn valuation int the next few years – including alternative protein startup AgriProtein and fusion power research energy company Tokamak Energy.

Writing in City AM before hosting the Future Tech Forum in London, digital and culture secretary Nadine Dorries said: “These companies are on the frontline of our fight for a better future.

“Two weeks on from the Cop26 summit, and the work to meet the ambitious targets agreed in Glasgow has already begun in earnest.”