My 5 reasons to invest in impact startups
By Marleen Evertsz,
Published on June 16, 2022
Forget the Googles and the Facebooks. According to Blackrock CEO Larry Fink, the next 1,000 billion-dollar start-ups will be businesses that make a positive contribution on a large scale to the environment or society.
More and more interesting investment opportunities in startups are presented over time. Where does this trend come from? And why is it a good idea to invest in impact startups? In this article, you'll find five reasons why investing in startups with a social mission can be both impactful and lucrative.
An investment in companies, funds and/or projects that make a positive contribution to, for example, the environment or society, in combination with an optimal financial return.
Marleen Evertsz, CEO and Co-founder of tokenized securities and digital asset trading platforms Nxchange and GoldRepublic
1: Step away from the dark side, you can also see climate change as a business opportunity!
Anyone who reads the newspaper or follows the news has probably noticed that we have a serious climate problem. If we want to tackle this issue, virtually every segment of the industry has to be reinvented. Achieving zero carbon emissions by 2050 is going to require a revolution in the production of everything we consume. The process of creating fuel, food and construction materials, with all the needs that we have as humanity - it all has to be reinvented. So you have a choice. You can either be on the sideline, do nothing, and watch our world go down, or you can invest in the bright innovators that turn our huge problem into a business opportunity.
2: Forget the government and large corporates, what can we do ourselves?
Only approximately 5% of our climate goals, agreed upon at the Paris treaty in 2015, have been achieved so far. It's depressing. Most people will likely feel these UN goals are probably a bit too hairy and audacious, and do not empower people to do anything about it. But, that is actually not the case. Startupbootcamp, Europe’s largest startup accelerator, has researched how many startups we would need in order to achieve these goals and they have come up with a number. 170,000 impact startups that contribute to the sustainable development goals are needed to drive the necessary innovation required to fix what we have broken. This may seem enormous, but considering that there are between 100,000 and 150,000 startups set up worldwide every single year, the goal suddenly seems a lot more reachable.
3: Impact is the new black
Impact is the new black. In current times, we give a ‘special status’ to companies that operate in a sustainable way or make an impact. I expect this to change within a decade. It’s simple: producing and offering products and services in a sustainable way will become regular credit. Companies that don’t operate in a sustainable way will get an increased cost of capital, if having access to capital at all. And that is without mentioning that the new generation will most likely choose companies that produce products or services that are offered in a sustainable way over the ones that don’t. Both from a consumer perspective as from an employment perspective.
4: In case you are not aware of our money depreciation and bubbles
Thanks to sky-high inflation, our money is rapidly depreciating in value. In addition, many banks charge negative interest rates on your savings account. Conclusion: anyone who leaves his or her savings in the bank will see it evaporate. Your wealth will be going down the drain at a pace you can't imagine. But what can you do? Basically, invest your money in everything the government can’t print. However, with the traditional stock exchanges which are massively overvalued and a housing market that seems about to burst you will need to be creative. Gold and cryptocurrencies are certainly good options, but early stage startups, especially the emerging tech ventures, have a growth potential that many other assets do not.
5: Startup accelerators can select and accelerate the hell out of this deathtrap
90% of all startups fail to reach their fourth year anniversary. Can you imagine, only 10% of all startups still exist after four years! Strong selection and an accelerator or venture building program can improve this success rate significantly. The numbers don’t lie. Startups that have been selected and accelerated by some of these accelerator programs increase their chance to reach their fourth year of life by up to 70%! Moreover, the first accelerator program was established in 2005. By now there are over 5,500 accelerator programs worldwide - which proves they are here for a reason!
How to do it
Investing in startups can provide a great 'upside', but certainly not without risk. Out of the 100,000 to 150,000 startups that are set up globally on an annual basis, you’ll first need to find the most successful ones. Like finding a needle in a haystack. Then placing your bets on only one startup is almost insane.
Make sure that you tag along with a professional selection process that ensures the startups you have selected are up for the win and assure that you diversify your investment portfolio of startups as much as you can - in the end it's just a numbers game.
We at Nxchange have made impact startup investing one of our core priorities. We collaborate with various startup accelerators in offering baskets of startups. Like Startupbootcamps' Bold Action portfolio, where you can invest in a basket of 90 impact startups in the domains of Financial Inclusivity & Wellbeing; Transport, Mobility & Access to Goods; and New Energy, Renewables & Decarbonization.
Do you have other questions about impact investing? Contact us.
CEO and Co-Founder Marleen Evertsz has a proven track record in leading innovative fintech companies. Being at the forefront of digitizing and trading physical assets with GoldRepublic since 2010, Marleen is now dedicated to building fully regulated, trading platforms for issuing and listing tokenized securities and digitized assets on Nxchange and GoldRepublic in close collaboration with European regulators, ABN Amro Clearing bank and the Rabobank.
About GoldRepublic & Nxchange
Tokenized securities and digitized assets are our thing at GoldRepublic and Nxchange. We have been dealing with trading these assets and allowing institutional and retail investors taking positions in these assets for over 10 years now.
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