As technology becomes all important in solving global problems such as climate change, escalating health risks, and food insecurity, UK impact tech startups – companies founded to build solutions to the UN Sustainable Development Goals – have raised £2B (approx €2.36B) in investment this year.
An analysis by Dealroom for the UK’s Digital Economy Council has shown that impact investment in the UK has increased by 127 per cent since 2018, up from £1.7B (approx €2B) last year.
Technology startups tackling global solutions
According to Rana Yared, general partner at Balderton Capital, “With more money than ever being invested in UK tech companies, it’s critically important to see that an increasing amount is being dedicated to supporting this new generation of impact companies. These companies have dual missions to have a positive effect on the world while being self-sustaining businesses. As these companies grow and scale, it’s important they have the right conditions to thrive and become global leaders.”
Currently, the UK is home to 12 impact unicorns – companies worth over $1B (approx €887.65M) or more in value. These include:
Arrival (London): It is a technology company that develops a generation of two electric vehicles (EV). It develops software, materials, components, and scalable skateboard platforms and its micro-factories that allow them to make vehicles and adapt to any mobility ecosystem.
Octopus Energy (London): The company was launched with a vision to use technology to make the green energy revolution affordable while transforming customer experiences. Octopus’s domestic energy arm already serves 3.1 million customers with cheaper and greener power through Octopus Energy, M&S Energy, Affect Energy, Ebico, London Power and Co-op Energy.
Babylon (London): The startup claims to be a digital-first, value-based care company with a mission to provide accessible and affordable quality healthcare for everyone. It believes it is reengineering healthcare by shifting the focus from sick care to preventative healthcare so that patients experience better health.
ITM Power (Sheffield): The company manufactures integrated hydrogen energy solutions to enhance the utilisation of renewable energy that would otherwise be wasted.
Ceres Power Holdings (Horsham): Ceres is a fuel cell technology and engineering company whose aim is to bring cleaner and cheaper energy to businesses, homes and vehicles.
Vertical Aerospace (Bristol): The company builds technology to revolutionise how people fly. It aims to make air travel personal, on-demand, and carbon-free through its eVTOL aircraft, the VA-X4.
Compass Pathways (London): Compass is a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health. Its first programme is researching how psilocybin therapy could help people with treatment-resistant depression.
Depop (London): It is the community-powered fashion marketplace to buy and sell fashion with over 30 million registered users in more than 150 countries.
Ovo Energy (Bristol): The OVO Group’s mission is to drive progress towards net zero carbon living. It is a collection of companies with a single vision: to power human progress with clean affordable energy for everyone.
Britishvolt (Blyth): The company’s mission is to accelerate the electrification of society. Its mission is to build the UK’s first battery gigaplant at a specially selected site in Northumberland. This represents a total investment of £2.6B, one of the UK’s largest-ever industrial investments, providing 3000 jobs and up to a further 5000 more in the wider supply chain.
Tractable (London): The company develops artificial intelligence systems for accident and disaster recovery. Through the use of deep learning to automate visual damage appraisal, Tractable’s AI looks at photos of the damage and predicts repair costs.
BenevolentAI (Cambridge): The company combines advanced AI and machine learning with “cutting edge” science to decipher complex disease biology, generate novel insights, and discover more effective medicines. Its computational R&D platform spans every step of the drug discovery process, powering an in-house pipeline of 25+ drug programmes from early discovery towards clinical phases.
In addition, there are now 22 impact futurecorns (soonicorns, as we call them) – scale-ups that are on track to reach unicorn valuation in the next few years. These include the alternative protein startup AgriProtein, fusion power research energy company Tokamak Energy, and mobile-delivered health and insurance provider Bima, with 25 million active users across Asia and Africa.
Luisa Alemany, an associate professor of management practice in strategy and entrepreneurship at London Business School’s Institute of Entrepreneurship and Private Capital, says, “From biotech to nanotech, cleantech, computer science and medicine, technology is not only improving our lives but finding solutions to these pressing problems that only entrepreneurs, with the right source of financing, can dare to solve.”
UK’s impact startups/scale-ups are worth €59.16B
Impact investing has grown across the globe with investors keen to back companies that will generate positive social and environmental impacts alongside financial returns.
In the UK, there are nearly 900 impact startups and scale-ups using technologies such as artificial intelligence, deep tech, big data, and blockchain to develop next-generation solutions to take on global problems. From Dundee to Dorset, these companies have a combined worth of £50B (approx €59.16B) and have created over 35,000 jobs.
Most of the capital from impact funds are going to companies creating affordable and clean energy, and tackling the climate crisis. Collectively, climate tech companies make up 65 per cent of the deals in the impact space.
This is being driven by companies such as the green energy provider Octopus Energy, which raised the biggest impact round this year of £438M, the electric car subscription platform ONTO, which raised £130M in a Series B round, and future energy company Newcleo, which launched earlier this year to disrupt the nuclear energy industry.
Startups leading the green revolution include London-based Plastic Energy with industrial plants across Spain. It raised £123M this year to transform plastic waste that would otherwise be destined for landfills into recycled oils that can be used to create clean, recycled plastic. Last year, UK climate tech investments made up more than a quarter (28.6 per cent) of all climate tech deals in Europe and are expected to continue increasing in value this year.
Besides climate tech companies, the UK’s impact startups are also focused on solving global health problems. For instance, UK’s Benevolent AI, a health impact company, is using big data and deep learning to discover more effective medicines. It has recently discovered a treatment for Covid-19 which has been approved by the US healthcare regulator.
Other health tech companies using big data include Huma, which enables remote patient monitoring to reduce hospital readmission rates in countries including the UK and Germany, and Cera, an app that helps families to provide the right care for their loved ones.
Gerard Grech, Founding CEO of Tech Nation, says, “The UK tech ecosystem is constantly innovating to solve societal, economic and environmental challenges – on a national and global scale. The contributions of these inspiring impact tech scaleups has never been more vital – as is made evident by the increase in impact tech investment that we have seen this year. The value of UK Net Zero tech companies alone has nearly doubled over the last year (skyrocketing from $24.4B to $47.6B).”
Future Tech Forum
Looking to the future of the country, UK’s Digital Secretary Nadine Dorries is all set to host the Future Tech Forum this week in London, marking the end of the UK’s Presidency of the G7.
It will be a two-day event attended by ministers from governments across the world. They will come together with experts from industry, civil society, and academia to discuss future public policy issues relating to the development and use of digital technologies.
The governments will particularly discuss how technology can deliver positive global change and deliver some of the ambitious targets agreed by nations at COP26 – the most recent annual UN climate change conference.
