A new report has revealed a rise in funding and M&A activity for businesses fuelling the sustainability agenda.
Technology advisory and investment firm GP Bullhound’s Impact investing and the rise of sustainable tech report showed impact technology companies are receiving a fast-increasing amount of private equity investment.
As the sector matures, those raises are becoming larger and focused on later-stage companies.
Analysing more than 10,000 fundraise transactions and 3,000 M&A transactions, starting in 2015, the report found that impact companies raised record levels of investment in Europe and North America in 2020 – breaking $10bn for the first time.
It also highlighted how funding for impact companies has increased by 51% in 2020, while the average size of funding rounds increased by 80% in 2020.
There were a number of notable mega-rounds ($100m+) in key impact sectors in 2020. Ecovadis and Back Market $100m+ rounds stand out as large rounds in fast-growing ESG analytics and refurbishing sectors.
Software companies have dominated funding rounds in this sub-sector – making up 45% of all impact investment activity.
M&A activity for impact companies also saw a record year in 2020 – reaching $69.8bn, with four mega–deals representing $36bn.
Khosla Ventures and Bain capital were revealed as investors with impact policy most active in sustainable tech, for early stage and later stage companies, respectively.
GP Bullhound’s report also explores the technology sectors that are benefiting most from the climate transition and sustainable development agenda, as well as highlighting the key drivers.
“It’s becoming increasingly clear that impact investing and the backing of companies that are fuelling the sustainability agenda, is the way forward and the market will only grow from here,” said Guillaume Bonneton, Partner at GP Bullhound.
“The figures speak for themselves – capital is fast moving into sectors that will define our economic future and help accelerate the climate transition.
“At GP Bullhound we are convinced that the tech ecosystem will play a major part in making our planet greener, fairer and safer, and it’s imperative that we see the current investment trends continue.”