Are impact ventures sustainable?
Impact ventures are businesses with a social or environmental impact at the core of their business activities. They sometimes earn the reputation of being more charitable than profitable because of the perception of impact in business, but that is not always the case.
Social and environmental impact is largely seen as a business responsibility that is executed after the core business activity is completed. The core business activities are meant to bring in income, and impact is a deliverable that is mandated for compliance.
A new generation of businesses are emerging that integrate impact into their business activities. There are many complex sustainability issues in our society today, with both environmental and social components. Impact ventures seek to solve many social issues, and sustainability is one of them.
When impact is woven into the essence of the venture, there can sometimes be issues of scalability which can limit the profits of an impact enterprise. This is not because impact ventures as a model fail to generate profits, but the scope of problems being addressed often targets specific or niche issues which highlight the need for innovative business models, strategic partnerships, and sustainable scaling strategies to unlock both growth and profitability..
Choosing to operate in a limited capacity and scale is often also a deliberate choice due to lack of resources, networks, funding, organisational capacity, and logistical support. Most startups face challenges in the growth stage, and impact ventures are affected more than regular startups.
Impact ventures are at a unique position to leverage the opportunity of growth for impact and profit.
Impact ventures in action
One example of impact ventures is the decarbonisation of last mile delivery. The logistics sector has grown tremendously in the last few years with billions of dollars invested into e-commerce and 10 minute grocery deliveries.
From an ESG perspective, this is a high emissions industry with millions of tonnes of carbon emissions per year, combined with the social and governance issues of the impact of pollution on delivery executives and citizens.
Solving the issue of emissions and pollution in this industry can help increase productivity and profits. Electrifying delivery fleets, for instance, can significantly lower fuel and maintenance costs, creating long-term savings while improving ESG performance. Delivery giants can solve the problem quicker by working with companies with expertise in ESG and decarbonisation, instead of solving it themselves.
Decarbonising industries like last mile delivery will help the proliferation of these emerging industries while minimising their impact on the environment and society. Growing through practices that cause environmental harm have been proven to be poor business practices in the long run. Leading decarbonisation and staying ahead of environmental legislation improves ESG performance on all fronts and reduces business risks.
Other examples of impact ventures include:
- Innovation in material technologies: Eliminating plastic from supply chains to create sustainable alternatives.
- Climate intelligence: Leveraging data-driven tools to enable quick, effective decision-making for climate adaptation.
- Energy efficiency interventions: Helping industries lower energy costs while reducing their environmental impact.
These examples demonstrate how impact ventures don’t just solve pressing issues — they also create pathways for financial growth and sustainability.
Defining impact
The first step in enabling impact ventures is defining the scope of “impact”. Professor Cat Johnson at the University of Michigan defines impact as “A significant, positive change that addresses a pressing social challenge.”
However, in the business world, a majority of companies focus impact solely around company values, CSR activities and strategic partnerships. This limits the scope of impact of a business to human resources, CSR programs that run on a fraction of the budget of the company, and maintaining a positive image in the eyes of shareholders and the public.
NOW Venture Studio works extensively with impact ventures using a unique definition of impact. Our framework is as follows:
- Economic: Revenue generated by portfolio startups, investments attracted, number of green jobs created
- Environmental: Carbon/GHG reduction, resource efficiency, pollution reduction, biodiversity increase
- Social: Number of beneficiaries of improved resource access, number of communities positively impacted
- Innovation: Number of patents filed, number of new technologies developed, number of prototypes developed
- Long term: Sustainability of ventures supported, longevity of the impact of the solutions, scalability of solutions
Using our impact framework, we select businesses to join our cohort of path-breaking deep tech and deep science startups solving for climate. Our vision is to create the next climate unicorns by accelerating sustainability, because there is No Other World.
Do you have a startup idea or climate solution? We invite applications for our 2025 cohort on a rolling basis. Click here to apply: https://f1vyleprf2x.typeform.com/to/BpVHyaIq?typeform-source=nowventurestudio.com
For stakeholders that would like to collaborate with NOW Venture Studio, please contact us on contact@nowventurestudio.
