Beyond Returns: Venture and growth investing fuelling sustainability & societal change

By European Women in VC, Founders Forum Group & Tech Nation // 4 June 2024

Discover our new report on the European venture capital ecosystem in partnership with European Women in VC.

The European tech ecosystem reached a combined market valuation of €3.46 trillion in Q1 2024, more than doubling in value over the past five years.

Much of this is driven by venture capital. Across Europe today, there are more than 2,400 active VC firms; 6.3 million jobs have been created by European VC-backed startups; and Europe has produced close to 200 active, private unicorn companies still headquartered in the region, driving innovation and positive impact across industries.

In our Beyond Returns report – a collaboration between European Women in VC, Founders Forum Group, and Tech Nation – we dive into the latest investment data to uncover the broad and transformative impact of venture capital on European tech, business, and society.

Through our comprehensive survey of 300+ leading European VC partners and LPs, plus feature-length interviews with some of the biggest backers of European venture capital, we reveal the strong appetite for impact among the investment community, their diversity and ESG strategies, and how they make their investment decisions. 

Key Findings:

1. More VC money is going to European positive impact-driven startups than ever before.

Of the €53b in venture capital investment raised by European tech startups in 2023, a third was raised by positive impact startups that directly address one or more of the UN SDGs. One in three VCs use the UN SDGs to guide their investments, with a strong focus on climate action.

2. LPs are especially motivated by the desire to make a positive environmental impact in their investment decisions.

One in three of the LPs we surveyed say that reducing carbon footprint is a top priority when choosing a fund to invest in. 73% say alignment with SDGs is important. 44% of LPs say that advancing climate change initiatives is a top priority in the next 12 months. 

3. Improving ESG performance is a top priority for the majority of VCs over the next 12 months.

More than one in two of the VCs we surveyed say that improving the ESG performance of their portfolio companies is a top priority for the next 12 months

4. There is a strong belief that increased diversity in venture capital leads to better investment decisions and financial returns – and this is translating into action.

87% of the VCs and LPs we surveyed overall say that increased diversity in venture capital leads to better investment decisions and financial returns, and 82% of VCs and 77% of LPs say the diversity of the founding team of the startups or funds they invest in is important. 

5. Superior returns and personal values and the will to change the world are the driving forces in the VC industry

88% of the VCs we surveyed say they use an impact investing tool or framework due to their personal or their fund’s values.

We believe that venture is the most impactful asset class. European VC and growth funds raised €23.7b in 2023 and €30.8b in 2022, the highest annual figures on record. VCs are sitting on tens of billions of euros of dry powder and this is now ready to be deployed into diverse, impact-focused startups.

Only by catalysing more institutional investment into venture can we fuel the step-change innovations in technology that transform industries, unlock outsized returns, and make lives better in Europe and beyond. 

Complete the form above to download our report.