Impact startups a match made in heaven for angel investors

Image credit: Rawpixel / Shutterstock

Angel investors are still backing impact startups significantly despite a wider slowdown in tech funding, according to new data.

Research from Bethnal Green Ventures, HSBC Innovation Banking and Floww found that 84% of surveyed angels have made recent investments in tech for good startups, with 63% making the investment in 2022.

The survey found that the bulk of angel investors are motivated by the impact of their investments on people and the planet. Climate tech in particular was a major impact investment area identified by the research, which surveyed 100 angel investors predominantly based in the UK.

Angel investments in tech for good businesses was particularly resilient to the funding downturn. Just 8% of respondents expected to reduce impact investments despite more than a quarter expecting fewer deals to be made over the next year.

“As early-stage VC in tech for good businesses, we’re pleased to see the growing appetite of angel investors to back founders driving positive impact at scale,” said Melanie Hayes, managing partner at Bethnal Green Ventures.

“Angels play such a pivotal role in the growth of early-stage businesses, and we hope that this trend in backing tech for good founders continues.”

The research also found that angels have become increasingly aware of ‘impact washing’, which are superficial claims of positive societal change that are unsupported by evidence.

Despite this, there was no consistent approach among the angels to assessing how genuine of an impact a startup can make.

“Angel investors often share a personal connection or passion for the startups’ mission,” Glen Waters, head of early stage practice at HSBC Innovation Banking UK. “The alignment can lead to a more committed and supportive partnership, extending beyond financial backing.”