Giant Leaps: climate tech and female founders are top of the pops in Australian impact investing

Women-led startups and others tackling climate and sustainability-related issues are emerging trends Australia’s impact startup ecosystem, a new report from VC Giant Leap reveals.

A snippet above a quarter (26%) of the impact opportunities reviewed by Giant Leap come from women-led ventures, a touch above the 23% average in the broader ecosystem.

Meanwhile, a majority (51%, up from 46% in 2021) of impact startups reviewed by VC are focused on sustainable living, which includes ideas to tackle climate change.

The findings are part of Giant Leap’s second Impact Startups Benchmark Report, which unpacks a detailed analysis of deals, resources and trends in the global impact startup ecosystem.

Breaking down the pitches perused, 29% of impact deals were around health and wellbeing, while only 12% fell into the category of empowering people — a criteria encompassing care and education.

Giant Leap Managing Partner Will Richardson said the pitches received by Giant Leap are screened for impact before being considered for investment, with roughly two-thirds meeting that criteria in 2022.

The fund defines an impact startup as one that has a tangible environmental or societal benefit embedded in its business model so that every dollar of revenue generated is inherently linked to the generation of measurable positive outcome.

“This report drives home a trend we’ve been seeing in the market for a while now: Australia is an incredible place to be an impact founder and investor,” he said.

“We’re seeing more and more incredible, inspiring people mobilising and coming together to unlock businesses’ immense potential to reimagine industries to create a better future and investors are realising that these businesses present an enormous opportunity.”

But Richardson argues that challenges remain.

“More work needs to be done to encourage and support founders from underrepresented backgrounds with diverse lived experiences. Given our current data, we believe that further work here will also lead to the creation of more impact startups,” he said.

“Also, despite the headwinds facing the startup ecosystem this year, we’re confident that impact startups will not only continue to grow, but will emerge from this period stronger than ever before. Many are addressing fundamental issues in society and the environment that will exist well beyond this downturn.”

Richard said that comparing various datasets, the report also estimates that Australia “may be punching above its weight” when it comes to the proportion of impact startups attaining funding.

Around 22% of all venture deals completed in Australia in 2022 funded impact companies. Elsewhere, that figure sits at around 8% of total VC funding to startups in the US and 18% in Europe.

Other key findings in Giant Leap’s Impact Startups Benchmark Report include:

• 20% of Australian startups fit Giant Leap’s criteria of an impact business, which has remained consistent from 2021 and tracked alongside significant growth in the number of local startups;
• Startup support services (funders, accelerators, co-working etc) for impact companies have grown 1.5x in two years, close to 100 from 67 in 2021;
• Understanding of impact is rising, with two-thirds (65%) of the pitches received from Giant Leap meeting the VC’s criteria, up from 56% in 2020;
• Giant Leap’s portfolio currents sits at 55% women-led companies, with a target to reach 60%.