The Future of Impact Startups

Exploring the idea of "doing good" and getting funded

Photo by Jan Tinneberg / Unsplash

Getting funded to do good is a dream come true for those passionate about making a difference to the environment or in society. Impact startups focus on people, the planet, and purpose more than they do on profit. This factor makes it a challenge where it concerns raising capital. Return on investment used to be the critical deciding factor for investors, most of whom believed that "doing good" might be too costly. However, a growing number of investors are beginning to support impact initiatives based on how they see themselves contributing to a more extensive plan, such as the United Nations Sustainable Development Goals(2015), the Paris Climate Accords(2016), or the European Green Deal(2020).

The standards and benchmarks for launching, growing, and scaling an impact endeavor are far different from those of traditional startups. This makes it essential to distinguish the approach and tools used to pitch ideas and define an appropriate business model. Impact startups have started to act and think differently, incorporating concepts such as zero competition, open-source everything, and building in public. The size and scale of a project were once thought to define how promising and successful it would be. New parameters such as the need for transformative change, the initiative’s intrinsic value, and the long-term momentum-created are now being awarded an equal recognition.

A simple online search gives prospective entrepreneurs access to vast amounts of knowledge, resources, and tools to connect, create and collaborate as they build, test, and launch their ideas. However, this doesn’t prove as easy for the community of Impact Entrepreneurs and Impact Investors. As a start, both sides need to begin speaking the same language. This means constructing and presenting ideas with a fresh approach that accounts for a new set of standards for the startup. The traditional pitch deck and business model need tweaking. Concentrating on the purpose more than the profit can often demonstrate the synergy in passion, dedication, and values of the entrepreneur and the investor. Coherency, consistency, and context allow both sides to be mutually understood and pave the way for a healthier investor-founder relationship.

In 2020, the global impact investing market size was estimated at $715 billion and is steadily growing. This trend has opened new opportunities for motivated impact champions and communities to start independent initiatives that do not rely on state and policy interventions. Impact startups of the future are starting small and autonomous yet hold tremendous potential to scale and improve world healing measures. Decentralized communities that share their learning and collaborate openly are disrupting how impact is being made. Greenwashing, exaggerating impact projections, and misusing SDG indicators were impeding the growth of the impact sector. Being honest and vulnerable in the face of challenges has given way to improved measurement and tracking indicators that strengthen the progress of this sector.

Given all the lessons we’ve learned over the last century, economies of scale and optimizing production for profit are no longer the core focus of doing business. Revisiting our humanity: being imperfect, vulnerable, and kind along with being respectful of our planet and all life it supports, is replacing the traditional mantras of doing business.

"Doing good" is not just for philanthropists but also for the brave new entrepreneurs. All you have to do is be open to new perspectives and find others passionate about the same concerns. Starting the conversation may someday turn into a self-sustaining business- and planet-friendly movement.

In the meantime, tell your friends!