VC Arm of Innovation Agency Launches $60 Million Fund

• The VC arm of the UK’s social innovation agency Nesta just launched a £50 million ($60 million) fund.
• The fund will invest in social and climate startups tackling equality, health, and sustainability. 
• We got an exclusive look at the 13-slide pitch deck used to convince Nesta’s board to launch the fund.

The venture capital arm of the UK’s social innovation agency Nesta has launched a £50 million (around $60 million) fund to back early-stage companies working on equality, health, and climate impact. 

Nesta Impact Investments, founded in 2012, will spend £25 million backing startups working to ensure every child has a fair start, to help tackle obesity, and create a sustainable future. The wide-ranging topics include everything from childcare software solutions to healthcare-focused biotech, and climate hardware aimed at decarbonizing households.

“They are three of the knottiest challenges that are facing us at this time, it [the focus] helps us to radically improve life chances, health, and the environment,” Lisa Barclay, the firm’s executive director of investments, told Insider.

It will write checks of up to £1 million to between five and 10 seed to Series A-stage startups, with the ability to invest up to £4 million over multiple rounds. While UK-focused, Nesta Impact Investments can invest in any geography as long as the company could have a positive impact on the UK market. 

The fund, which is Nesta’s fourth, lines up with the wider company’s goals to make the world a healthier, fairer, and more sustainable place. Its current deal flow is heavily weighted towards climate tech, Barclay said. She wants to hear from founders across each of the three categories and is interested in food reformulation, calorie reduction in foods, and early years development.

The remaining £25 million will be used in a joint venture with Brent Hoberman’s Founders Factory, with the two organizations launching a venture builder called Mission Studio. They will be “laser-focused” on the three impact goals and come up with new ideas for companies from scratch, then “hire founders in.” 

The fund represents 10% of Nesta’s private endowment, a permanent pool of cash that originally came from the National Lottery. 

The team has made several investments from the new fund so far, with the first three being female-founded startups. This includes childcare platform Koru Kids, diabetes management startup Habitual Health, and weight loss company Oxford Medical Products. 

“We set ourselves a goal last year to have 25% of our portfolio led by people from minoritized or disadvantaged groups by 2025,” Barclay said.

“We’ve made a very conscious effort on EDI on a number of fronts, but in particular around our portfolio, because we knew that historically, it just wasn’t good enough on the diversity front. We’re thrilled that we’ve found really dynamic, strong female founders.

“Obviously that’s not the only criteria that we will be looking at – we want to back really exciting high growth potential companies – but we found that we can that really strong female founders.”

In this portfolio, Nesta Impact Investments is running at 71% from minoritized or disadvantaged groups, according to Barclay.

The firm has been accredited by a diversity in VC standard and works with Nesta’s offices in Scotland and Wales to find startups outside of London. 

Nesta Impact Investments is on the lookout for founders with credibility in their respective market, who are authentic about their impact and mission, and who are committed to impact and commercial success equally, Barclay said. The team also wants to see businesses with proven proof points, some traction, and the ability to scale. 

We got an exclusive look at the 13-slide pitch deck Nesta Impact Investments used to sell Nesta’s board on the new fund. Read it below: