The landscape of venture capital in Europe is evolving with a distinct focus on positive impact and sustainability. According to a recent report by European Women in VC, in 2023, a third of the €53B VC investment raised in Europe was directed towards startups addressing one or more of the United Nations SDGs.

The surge in impact-driven investments is evident across various sectors. Investment in European climate tech startups has tripled over the past three years, reaching more than €20B. Similarly, investments in deep tech startups, including AI-driven drug discovery and quantum computing, have more than doubled to €16.5 million over the past five years.

However, this is not enough, Kerstin Jorna, Director General at the European Commission believes.

“Despite the steady growth of the European VC market, we are still lagging behind other global players. This gap is particularly visible for late-stage financing, especially in clean tech, quantum computing and AI. To meet our investment needs, we need to channel more money into the EU capital market. We need bigger funds with more firepower, and we need to attract more investors into venture capital.”

The report, which surveyed 300+ European VC partners and LPs, highlights the growing appetite for impact among the investment community. It explores their diversity and ESG strategies. Europe currently boasts over 2,400 active VC firms, with these firms contributing to the creation of 6.3M jobs in the company they’ve backed and nearly 200 unicorn companies.

 87% Vote for Diversity in VC

 A significant finding from the report is the strong belief among VCs and LPs in diversity. 87% of respondents agree that increased diversity in venture capital leads to better investment decisions and financial returns. Additionally, 82% of VCs and 77% of LPs consider the diversity of the founding team of startups or funds they invest in to be important.

Sources: TheRecursice