Returns and sustainability go 🤝 in venture
The European Women in VC launched a report exploring how venture capital is fueling sustainability, inclusion, and societal change. Backed by insights from 300+ European VC partners and LPs, the findings show one thing clearly: impact investing is no longer a side trend — it’s becoming the core of European VC.
One-third of VC capital now goes to impact startups
In 2023, €53B was raised by European tech startups — and remarkably, 1/3 of that went to positive impact-driven companies. That momentum is especially strong in the Nordics, where 61% of VC investments last year supported impact startups, more than double the average across other regions.
VCs are increasingly aligning their portfolios with the UN Sustainable Development Goals (SDGs), with climate action emerging as a top focus. ESG (Environmental, Social, and Governance) performance is now a business priority, not just a nice-to-have.
VCs and LPs are putting values into action
The shift toward sustainability is being driven by both personal values and performance potential:
- 87% of VCs and LPs say diversity improves investment decisions and returns.
- 60% of LPs list environmental concerns as a top priority when selecting funds.
- 28% of VCs plan to pursue more ESG-aligned investments in the coming year.
- 23% want to grow the number of ESG-forward companies in their portfolios.
Across the board, investors are treating ESG strategies as essential, with 65% of LPs requiring portfolio companies and funds to track and report ESG metrics. That said, the report highlights a need for more standardized ESG frameworks, especially to support smaller funds navigating reporting demands.
Diversity is driving results, not just headlines
There’s a clear business case for diversity in venture. Half of respondents believe diverse VC teams make significantly better decisions and generate higher returns. And 87% agree it leads to stronger outcomes overall — underscoring that equity and performance are not at odds but deeply interconnected.
Source: https://www.eu.vc/p/returns-and-sustainability-go-in?utm_source=publication-search
