Bethnal Green Ventures (BGV), in partnership with HSBC Innovation Banking UK and Floww has released the “Tech for Good Angels” report today revealing that despite a venture funding downturn, angels are doubling down to invest in tech for good businesses.
Recent research from the Global Impact Investing Network (GIIN) revealed that the impact investing market topped $1 trillion in assets under management last year. However, virtually no research is available to understand the pivotal role that angels play in supporting businesses driving positive outcomes for people and the planet.
The newly published Tech for Good Angels report provides a baseline for understanding important trends about angels backing founders who are building tech businesses that tackle pressing social and environmental problems at scale.
- 84% of surveyed angels invested in tech for good businesses
- 63% made between 1-5 investments in 2022
- 46% invest at pre-seed
- 54% invest with an average ticket size of £5k-20k.
The research revealed that angels are led by two key motivations: they care about the impact on people and planet, and they want to leverage their expertise to help founders succeed. Green investments lead the way, with interest in backing startups taking climate action and providing affordable and clean energy dominating the field. Early backing from angels in this domain could significantly shape the future of tech for good with more climate tech startups emerging and scaling successfully.
Melanie Hayes, Managing Partner at Bethnal Green Ventures said: “As early-stage VC in tech for good businesses, we’re pleased to see the growing appetite of angel investors to back founders driving positive impact at scale. Angels play such a pivotal role in the growth of early-stage businesses, and we hope that this trend in backing tech for good founders continues.”
Angels are increasingly aware of the risks of impact washing. Our research revealed there is no consistent approach for angels to assess the impact potential of startups with many citing challenges in understanding the potential markets, a lack of what ‘good’ looks like for returns and growth. Alongside this report, BGV released an ‘Impact DDQ’ to support angels with more robust ways to assess a company’s impact potential.
Tech for good is more resilient in the current venture funding downturn; whilst 27% of angels expect to do fewer deals in 2023, only 8% expect to reduce the amount of capital they invest in tech for good.
Our research shows that a stronger ecosystem is needed to unlock capital from angels. Whilst there is a strong incentive for angels to invest in tech for good, angels desire connection to others angels and better visibility of investment opportunities.
Commenting on the need for a stronger angel ecosystem for tech for good, Martijn de Wever, CEO and Founder of Floww said: “Angels are the lifeblood of growth for early-stage, impact-focused tech firms. We recognise the barriers and frictions they so frequently face in accessing investment opportunities and connecting with other angels. Investors need a financial infrastructure that creates liquidity and provides access to a vast range of opportunities amongst innovative private companies. This is what Floww's platform has been designed for".
Glen Waters, Head of Early Stage Practice, HSBC Innovation Banking UK, adds: “Angel investors often share a personal connection or passion for the startups mission. The alignment can lead to a more committed and supportive partnership, extending beyond financial backing. At HSBC Innovation Banking, it’s exciting for us to see an increasing number of syndicates and angel networks, creating a more robust, dynamic environment for founders and the ecosystem.”
Resources for angels
The report showed us that there's a massive need for angels to streamline how they screen for impact potential, and to that effect we published a due diligence questionnaire to help angel investors do that. We also published two directories of angel investor networks in the UK and abroad, in the hope that angels will be able to connect with each other and put more capital into tech for good businesses together.
For more information, links to our resources and the full report, visit our site: www.bethnalgreenventures.com/angel-investor-resources