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UK impact tech startups raise £2bn in 2021, combined value hits £50bn

uk impact startups

UK impact tech startups – those building solutions to address one of the United Nations’ Sustainable Development Goals – have raised £2bn in 2021, according to figures published by Dealroom for the UK’s Digital Economy Council.

The analysis shows there’s been a 127%  increase in UK impact tech investment since 2018, while the figure is up from £1.7bn in 2020.

These startups aim to solve some of the world’s most pressing issues such as food insecurity, climate change, and gender inequality.

UK impact tech sector thrives

Impact investments have grown worldwide as more investors choose to back companies that will have a positive social and environmental impact, not just financial returns. The UK is particularly well-positioned in this area as it is home to 900 impact startups and scaleups using AI, blockchain, big data, and other technologies to combat global issues.

UK impact tech startups have a combined value of £50bn and have created over 35,000 jobs, the Dealroom figures show. The UK’s biggest impact funding round in 2021 was £438m pumped into green energy provider Octopus Energy.

Currently, the UK has 12 impact unicorns, impact tech companies with a valuation of $1bn or more. Of these, six of them are based outside of London.

The UK’s impact tech startups include Tractable, Arrival, Babylon and BenevolentAI.

Looking ahead, there are as many as 22 impact ‘futurecorns’, high-growth companies on course to reach unicorn status in a few years.

“Impact investing has come a long way since its start in the late 90s when it was considered more of a philanthropic endeavour until investors realised these investments could deliver not only a social benefit but also a financial return,” said Luisa Alemany, associate professor of management practice in strategy and entrepreneurship at London Business School’s Institute of Entrepreneurship and Private Capital. “At the heart of this is technology, as the way to scale social impact is by applying science and technology.”

From COP26 to Future Tech Forum

The figures come as UK digital secretary Nadine Dorries is set to host the Future Tech Forum in London this week. Ministers from governments worldwide will attend the two-day event along with experts from civil, industry, and academia.

They will discuss future public policy issues related to the development and deployment of digital technologies, with a focus on those that deliver positive change.

The meeting follows on from climate targets agreed by nations at COP26, which saw ambitious target agreed but agreements to phase out coal watered down at the last moment.

“From world-class AI discovering new treatments for Covid-19 to green energy solutions paving the way to a net-zero future, UK tech is transforming the world for the better,” said Dorries. “Our impact startups are raising investment with nearly £2bn in funding this year to help fight some of the most pressing problems we face as a planet.”