Investors who invest in new ideas very early on now prefer start-ups that are geared towards sustainability. This is the result of an independent study by FTI Consulting, explained the US company Amazon, on whose behalf the study was carried out.
In April 2023, 509 institutional or private investors from Great Britain, France, Germany, Italy and Spain were surveyed for the study. More than 100 investors in each country provided information. Compared to the previous year, however, the figures were slightly lower.
According to Amazon, however, these slight deviations still fall within the margin of error of such studies. The fact that German investors rejected investment in a start-up more often (58 percent) than investors from other countries or markets (see below) due to concerns about ecological sustainability speaks for a continued high level of interest in sustainability.
sustainability goals of their own companies
As Amazon explains, 70 percent of the German investors surveyed have asked for more information about the sustainability of the start-ups in which they want to invest in the past 12 months. The reasons for this are said to have been both personal convictions and the sustainability commitments of their own companies. A year earlier, 73 percent of the 103 German investors surveyed stated that they had requested information on sustainability.
According to German venture capital and private equity investors, start-ups that are geared towards sustainability achieved a valuation premium of 13 percent this year; in 2022 the value was still 15.9. For this year, it added that the score could drop by up to five percent if startups had a poor sustainability record.
According to the current evaluation, 58 percent of German investors rejected investments in a start-up in the past few months due to concerns about the company’s verifiable sustainability record. 77 percent of them also stated that start-ups need more support to anchor more sustainable operations.
Rocco Bräuniger, Country Manager Amazon.de, explains: “The study illustrates the clear advantage that companies with a strong focus on sustainability have – and illustrates that sustainability considerations are increasingly also guiding investment decisions. Because investors are looking for solutions to the current challenges in the areas of climate and waste”.
Amazons Sustainability Accelerator
Amazon has been running its own program for start-up funding since last year, the “Sustainability Accelerator”. In 2022, 1300 start-ups applied, twelve were funded, two of them came from Germany. In line with the latest study results, the company has now announced the names of 16 start-ups that will be funded in the second round of the Sustainability Accelerator. The program is intended to help “scale companies and develop innovative technologies and more sustainable products.”
Four of the start-ups selected this year are from Germany: The start-up “FUNQ'” has developed a superfruit syrup that you can mix yourself, “Papair” is promoting bubble wrap made from recycled paper, “Open Funk” is developing a kitchen mixer for conventional preserving jars and the start-up “We Do Solar” wants to sell intelligent balcony solar systems.
Mentoring, networking, financial support
According to Amazon, 1,500 applications for funding were received. The company again selected the winners together with the European Institute for Innovation and Technology (EIT) and the British NGO “WRAP”, which takes care of the topic of circular economy. Part of the funding is a 12-week program designed to help founders scale their business. Both workshops and mentoring are available. An improvement in the sustainability balance is also possible through a joint climate impact assessment of the business model.
In addition to the program, the selected startups will receive an equity-free grant of EUR 12,000 and AWS credits worth USD 25,000. Amazon offices in Berlin and London can also be used free of charge. Start-ups in the consumer goods sector also receive free access to Amazon Launchpad for one year. Of the 16 selected start-ups, ten come from the “consumer goods” sector, and six start-ups have found themselves in the “recycling” sector. The German participants can all be assigned to the consumer goods sector. According to Amazon, the program will end with the opportunity to present one’s own start-up to a broader audience of experienced investors.
Rising CO₂ emissions
While Amazon advertises more sustainability with the Sustainability Accelerator program, its own climate balance does not look good at the moment. Although the company wants to be climate-neutral by 2040, CO₂ emissions have increased in recent years. While the equivalent of 51.17 million tons of carbon dioxide was emitted in 2019, by 2020 it was already 60.64 million tons. In 2021 there was an increase of 18 percent to 71.54 million tons.