Increasing interest in Venture Capital from asset allocators highlights the growing significance of innovation in everyone's portfolios. However, everything hinges on one central question: Will the math of venture work out? Will there be enough brilliant founders to invest in? We think so, based on three observable trends:
Unprecedented availability of talent globally
We are witnessing a rising supply of global talent amidst layoffs and employee dissatisfaction. In 2023 alone, tech companies laid off over 260,000 workers.
In parallel, employees are also leading an exodus. Over 50% of employees around the world are in the active stage of considering quitting their jobs. Remote workers face severe disconnection, with 72% disengaged from the purpose of their company. This is the prelude to an era of unparalleled global availability of talent, with many turning to entrepreneurship to take control in an uncertain time. What causes this dissatisfaction? Where will workers migrate? Will this availability of talent spur new companies being founded, like Facebook, Uber, and Airbnb, born out of dissatisfaction with the norm, driven by a vision for a new world?
Early-stage deals are the litmus test for a migration to purpose
We believe in a migration to purpose—we see it at Antler, where we are investing at ‘day zero, the earliest stage possible, and early-stage deals are confirming this trend. Across six continents, we are seeing founders seek purpose to distance themselves from the misalignment they faced with a previous job, such as motivating customers to click on more ads.
Take Ocean Oasis, for example: co-founded by Kristine Bangstad Fredriksen, Thomas Berge Johannessen, and Sebastian Feimblatt, the cleantech startup uses offshore desalination technology powered by waves to provide freshwater. Their DESALIFE project, which supplies water to communities and farmers in northern Gran Canaria, reduces dependence on traditional energy grids and is supported by EU grants, including co-funding from the European Innovation Council Accelerator.
We found over 50% of our pre-seed stage portfolio companies have already considered environmental implications across their product life cycles
Through Antler’s access to the earliest stages of innovation, we’ve also found over 50% of our pre-seed stage portfolio companies have already considered environmental implications across their product life cycles. Outlier founders will increasingly be the ones who incorporate ESG and impact from the earliest stages—as early as day zero.
Early-stage deals affirm this migration to purpose. Circular economy startups grew by 101% in the past two years alone, with the 10 most active climate tech investors in 2023 all investing at seed or series A stages. Half of our impact companies at Antler are climate companies, and 75% of these climate-related tech companies have gone on to raise external capital.
Founders prioritize ESG integration
Data shows how seriously founders take ESG integration—a strong motivator for founders to start companies: The World Economic Forum published research indicating early-stage founders may even bring unprecedented prioritization of ESG integration. 68% of start-ups were already integrating ESG strategy from day one as core to its scalable competitive edge, outperforming later stages of growth.
Founders are effectively voting through starting companies, a strategy entrepreneurs have historically used to promote innovation by “proactively changing industry norms.” Entrepreneurs have influenced some of the most known environmental policies today, such as the United States Leadership in Energy and Environmental Design (LEED) building certification.
As tech founders increasingly prioritize purpose and ESG integration, we can expect to see a surge of innovative companies generating profits but also making a positive impact on the world.
As tech founders increasingly prioritize purpose and ESG integration, we can expect to see a surge of innovative companies generating profits but also making a positive impact on the world. This trend is already underway, with climate tech investments defying the market slump and a growing number of founders considering environmental implications from the earliest stages of their companies. By voting with their ventures, tech founders are leading the way toward a more sustainable and equitable future.
An earlier version of this article was published in EU Startups
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