Investors more likely to back start-ups with strong sustainability credentials

Amazon launchpad sustainability accelerator. Cohort 1. Picture: Richard Cannon

Some 70 per cent of early-stage investors are requesting more detail on the sustainability strategy of start-ups before they decide to invest, according to new independent research from Amazon. 83 per cent of the investors surveyed said they want to invest in more environmentally sustainable start-ups, and those companies with a strong sustainability profile will often command a 16% valuation premium, underlining the opportunity for entrepreneurs who are building more sustainable products and businesses.*

An overwhelming majority (85%) believe start-ups perform better in the long-term if they have sustainability and purpose built into their business models from the outset. Those investors say the biggest challenge facing start-ups in the next year will be ‘accessing and securing finance’ (38%), followed closely by ‘mitigating or lessening their environmental impact’ (36%). More than half (59%) of early-stage investors surveyed in Europe said they have declined an investment opportunity in the last year due to sustainability concerns.

The research comes as Amazon and EIT Climate-KIC, the European Union’s climate innovation initiative, announce the 12 early-stage start-ups joining the first ever Amazon Launchpad Sustainability Accelerator to help them scale their businesses, following more than 1,200 applications from across the UK and Europe. Each Accelerator start-up is committed to reducing the environmental impact of their products, an increasingly important factor in securing funds from investors.

The Amazon Launchpad Sustainability Accelerator will provide start-ups with a support package worth more than £30,000 through an equity-free grant, AWS Activate Credits and Amazon Advertising credits, together with expert mentorship and a tailored curriculum through the Accelerator. Start-ups will join the dedicated Accelerator space at Amazon’s London headquarters for the duration of the programme, and receive free access to Amazon Launchpad for a year which includes strategic account support and marketing benefits.

All Accelerator participants will complete a Climate Impact Assessment by Impact Forecast to help ensure their products are quantifiably more sustainable than what is currently available. This will also help them consider new ingredients, raw and recycled materials, and other innovations to develop and offer more sustainable products.

The first Amazon Launchpad Sustainability Accelerator start-ups are:

  • adrop (Germany) – a refillable hand sanitiser startup made from 100% natural ingredients, using recycled materials in their packaging.
  • baybies (Germany) – vegan, gender-neutral baby care products on a mission to save the planet for kids.
  • Cleannest (UK) – a digitally-native nappy company blending high performance sustainable materials with a long-term vision to create a 100% biodegradable diaper.
  • ETHOSA (UK) – waterless, powder-to-gel shower products designed with simplicity and sustainability in mind.
  • Grub Club Pets (UK) – naturally hypoallergenic, vet-approved, insect-based pet food that delivers the nutritional goodness of regular meat, without the carbon footprint and meat-related allergies.
  • Home Things (UK) – refillable and sustainable home cleaning products to help people minimise single-use plastics.
  • KLIR (UK) – a research-based supplements brand to boost brain function, building sustainability into each step of their supply chain, from sourcing to packaging.
  • Laundry Leaves (UK) – waterless laundry detergent sheets that replace plastic bottles and can be shipped more sustainably than heavy traditional detergent.
  • OMNI (UK) – vet formulated and nutritionally complete plant-based pet food which uses less land, water and creates fewer greenhouse gases compared to meat-based equivalents.
  • Skingredients (Ireland) – a natural skincare brand with a refillable, recyclable packaging system.
  • SURI (UK) – electric toothbrushes which are reusable and repairable, with replaceable heads made from plant-based materials.
  • YOKUU (Belgium) – waterless, probiotic-based cleaning products.

“Entrepreneurs are finding ways to turn the challenge of climate change into a growth opportunity, and investors are backing those start-ups with sustainability in mind from the outset, moving away from businesses where those credentials are missing,” said Aditi Singh, General Manager, Amazon Launchpad, Europe. “This is where the Amazon Launchpad Sustainability Accelerator comes in – we have designed a programme to help founders start and scale more sustainable product-based businesses with expert-led virtual workshops, specialised mentorship, a tailored curriculum, and access to a network of like-minded founders. We are excited to welcome our first Accelerator group. Impact can only happen at scale, and scale will only happen if businesses large and small are choosing to lead at pace.”

“Investors perceive climate-positive businesses as more likely to deliver on financial performance, and more frequently, they are being pressured away from companies that don’t demonstrate sufficient impact potential,” said Aimee Apel Accelerator Lead, EIT Climate-KIC. “We have selected a stellar cohort of start-ups for our first Amazon Launchpad Sustainability Accelerator, and we are looking forward to helping them navigate these complexities and ensure they are sustainable from the start by accessing the support, grants and visibility they need to scale.”

Full details of the Amazon Launchpad Sustainability Accelerator available here.

*FTI Consulting, a global business advisory and research firm, conducted a survey of n=632 respondents who invest in start-ups as a professional investor or in a personal capacity, between 29 March – 6 April 2022, with more 100 respondents in each of the following counties: UK, France, Germany, Italy, Spain and Austria.