With a robust development of the global and European economy, it becomes increasingly evident that actions taken on the financial and capital markets have a direct impact on the real spheres of the economy and society. More and more private and institutional investors in the VC and startup ecosystem realize, that investments can be a powerful tool used for social change, climate justice, and sustainable development.
Impact investing is an investment strategy that is about more than just simple profit - it is all about providing capital to projects that generate positive, social or environmental, impact. It's built on the foundation of corporate social responsibility and ethical finance, with impact VC funds including ESG factors as one of the key elements of their decision-making processes and investment analyses.
It’s worth mentioning that the robust growth of impact investing is regionally differentiated and influenced by a specific country’s investment landscape, socio-political structures, and general market trends. It’s apparent that in the CEE region, which is the subject of this article, SRIs and sustainable, eco-conscious investments are peripheral strategies, fading in comparison to numbers recorded by impact VC funds in Western Europe. Nevertheless, their popularity is steadily increasing, year by year, especially against the backdrop of new EU regulations (such as the green taxonomy) and a growing number of international agreements that encourage VCs to prioritize sustainability-themed investment strategies. And if you want to discover more VC funds, check out our VC list - a complex database of the best early-stage venture capital funds investing in innovative startups across different verticals. Read More.
So without further ado, let’s have a look at the budding market of impact investing in the CEE and meet top funds that follow the ESG principles.
Impact Ventures
Hungarian Impact Ventures, as the name suggests, is a specialist fund focusing on Impact Investments in social SMEs in Hungary and Europe. The company manages two social impact funds, with the aim to combine a financial return with a positive impact in the areas such as social inclusion, education, employment, health, and environmental sustainability. This impact should be integrated into the scalable business model of selected startups, well-defined, and systematically measured. Impact Ventures investees can count not only on capital injection but also on integrated support through the company’s know-how, network, and operational experience. For its portfolio, the fund seeks early-stage or growth startups, offering investment tickets ranging between 0,3 – 2M EUR or 100-300K EUR (depending on the fund), with the possibility of follow-on investments. So far, Impact Ventures has backed companies such as Lifeed, a digital training solution for working parents and caregivers, or Green Fox Academy, a startup providing new education products for the tech-driven labor market and talent-sourcing-driven headhunting services.
Feelsgood Social Impact Investment Fund
Feelsgood is a Zagreb-based fund, investing in Croatian and Slovenian startups, that have a strong commercial business model supplemented by their measurable social impact. It mainly looks into companies, that address in their operations one of the 17 Sustainable Development Goals and consciously implement them in their business strategy. The fund is also backed by an academic advisory panel, that helps out in measuring the impact indicators of their portfolio companies as well as the ESG metrics. As of now, they backed companies such as Mindsmiths - a global human-centric AI development platform, enabling developers to build Autonomous Support Systems that proactively help people live healthier, happier, and more fulfilling lives, Beon - increasing social inclusion of enforcement debtors by providing financial consulting related to debt restructuring and bridge loans or Agrivi, providing digital agtech solutions on a mission to help farmers and other industry stakeholders to reach a sustainable food production.
Simpact VC
Simpact VC is the first impact investment venture capital fund in Poland, with its impact values incorporated in the company policy. It invests in tech innovations, that are not only promising in terms of growth but also solve social and environmental problems in a financially sustainable way. Their focus lies not only in elevating startups with a positive impact on society but also in educating the market on sustainable investing and building evidence for social returns. They invest based on the following criteria: technology ( technology-driven projects with ambitious R&D plans), profit ( viable business model with a potential to scale internationally), and impact ( founders with a clearly defined goal to create a sustainable positive impact on society or the environment). So far, they have invested in companies such as 4Nature System, aiming to improve the well-being of employees by using IoT to introduce plants into the office spaces, Travatar - a cloud-based solution eliminating fake traffic and fraud and Dekoeko - a platform that aims to promote and build a strong upcycling, eco-design and slow fashion market in Poland.
EEC Ventures
EEC Ventures is yet another Polish company that combines seeking profit with seeking purpose. It is a holding company that manages the EEC Magenta venture capital fund, following the principles of responsible investment with the mission to finance the digitalization of energy and industry. The fund primarily looks for CEE startups in all development stages - from seed to expansion with an investment horizon of 7 years. EEC's sectors of interest are the following: cleantech, circular economy, new business models related to renewable energy, Industry 4.0, cybersecurity, optimization of industrial processes, enhancing the efficiency of the economy in terms of energy and materials, and much more. Their portfolio boasts companies such as Glopack - a manufacturer of an innovative ecological stretch film that is more effective than its standard counterparts, Waste24 - a waste management marketplace for individual clients, companies, and municipalities and Lekta - a technology company providing conversational AI technology for customer success solutions.
Limitless Impact Investments
Limitless Impact Investments is an Estonian entry on the list, founded in 2019 by Wise (formerly TransferWise) and Skype alumni, with the purpose of enforcing investments as a tool for positive impact on the planet and society. They believe in backing the companies that are not only focusing on making a financial profit but also contributing to the well-being of others through solving complicated problems in sectors such as health, education or environmental sustainability. The fund is specialized in revenue-based financing, building up a financially sustainable business while creating as much positive impact as possible. Startups supported by Limitless include Reverse Resources - A SaaS platform to digitize, connect and scale global textile-to-textile recycling, KIRA - making sustainable footwear and other products, with a minimal ecological footprint, and Siffi, offering high-quality mental health support on-demand.
Inven Capital
Inven Capital is an active VC firm, based in the Czech Republic, that found its place on this list even though they are not self-defined as strictly 'impact investing' - they are however operating in the sectors of cleantech, energy efficiency, clean transportation, and smart cities, which undoubtedly have a positive impact on the environment. Their investment focus lies in fast-growing European and Israeli startups, with scalable business, innovative solutions, and a solid team. The size of their investments varies between 2-30M EUR, offering both minority and majority stakes for the period of 3-7 years. In their portfolio there are companies such as Tado, saving energy by using smart thermostats/AC, powered by unique applications on smartphones, Sunfire - a breakthrough fuel cell and electrolyzer technology replacing the conventional fossil fuel and Cloud & Heat - creating a network of green, highly efficient data centers close to the end user, accommodating the computing needs of a distributed digital world, whilst reusing server heat for hot water and heating.
Contrarian Ventures
Contrarian Ventures is a Vilnius-based fund, backing entrepreneurs tackling the climate crisis. It has a mission to leverage technological solutions in order to achieve a net-zero carbon footprint. The fund supports climate tech founders not only with financing but also a process-driven approach to enable their operations, business development, and more. They are focused on community and investors' networks, that are utilized to help early-stage and seed, European and Israeli startups, operating mostly in the following sectors: Energy Storage, Smart Grid, EV Charging, and Energy Efficiency. The investment size offered is flexible, starting around €500k. So far they have supported 19 companies from 8 countries, among them entries such as H2Pro, commercializing a novel “E-TAC” electrolysis technology and PVcase - helping companies design, estimate, and optimize commercial and utility-scale solar assets.
Ragnarson
Ragnarson, founded in 2006, is a Poland-based company that is not only an early-stage impact-driven fund but also a software agency and angel investor, investing and co-creating products with founders. It seeks to back early-stage startups with an MVP or pre-product, creating a positive impact in some of the following areas: climate change, sustainable development, or socioeconomic inequalities. It is offering a pre-seed round capital for software companies as well as advisory services, helping in building MVP and growing its functionalities, and eventually setting up an efficient and trained tech team. Amongst their portfolio companies, there are: Global Changer - a berlin-based technology company that helps accelerate the decarbonization of SMEs and corporations, Pool - which offers fashion as a service, where users rent and swap sustainable menswear garments as much as they like, for a monthly subscription fee and bikefair - a marketplace for verified, second-hand bikes.
Tilia Impact Ventures
Tilia Impact Ventures is yet another entry on the list with Czech origins. This is the first fully impact-driven fund in the Czech Republic, investing in companies that have a measurable impact on society or the environment. Its mission is to promote impact investing in the country and build up founders making positive contributions to the world. Social enterprises backed by this fund can expect many different forms of financial support ranging from flexible loans, and mezzanine financing, to direct investments. They are also granted non-financial help through cooperating with industry experts, strategic consultants, business, operation, and management support - all intended to maximize the positive impact and reinforce the connection between values followed by its investees and the profit they make. Tilia has so far backed companies such as Datlab - a Czech IT company specializing in data extraction (using complex data-mining tools) and Cyrkl - a waste-to-resource marketplace and consulting company that has a potentially huge environmental impact.
Smart Impact Capital
Smart Impact Capital is a Romanian early-stage fund, supporting impact-driven entrepreneurs making solid social or environmental returns. The fund is backing CEE companies with small ticket sizes ranging between 10-100K EUR. It accelerates the selected companies and prepares them for a successful Series A. Its portfolio includes entries such as Telios - one of the pioneers of telemedicine in Romania, Amsimcel - specialized in high-performance computing for the acceleration of IC design, deep learning and complex systems verification or Seedblink - the largest equity crowdfunding platform in South East Europe, offering a simple method of investing in innovative startups.
Rockaway Ventures
Rockaway Ventures is a Czech investment group, strategically focused on internet companies that innovate in the space of the digital economy. It is committed to using ESG principles as decision-making metrics with the belief that ESG-driven companies not only perform better but can also bring disruptive innovations to tackle urgent global problems. In 2021 Rockaway Ventures launched a Fund dedicated to supporting digital economy startups making a positive impact. It backs startups located in the CEE region, disrupting the traditional industries whilst following the ESG principles in the following sectors: Retail/E-tail, Supply Chain Tech, Telco-Media & Entertainment, Fintech, Digital Health, Cybersecurity & Data Management, Food Tech, Cleantech, Proptech, EdTech and Smart Travel. The fund's investments include Estonian Lingvist, which has developed a language learning platform that effectively reduces the time needed to learn a new language and Vivere, a German company that incubates, develops, produces and sells innovative FMCG products based on comprehensive demand and trend data analysis.
EIT InnoEnergy Central Europe
EIT InnoEnergy is an initiative created by the EU, with a mission to decarbonize Europe by 2050 and to empower those working towards a more sustainable future for the continent and the world. Startup financing is one of the arms of these initiatives - InnoEnergy is a pan-European investor, however, it has such a strong impact and presence in the CEE region that had to be included in our roundup. It looks for startups and scaleups with ambitions to become leaders of the cleantech industry with a proven prototype or proof of concept for an innovative product in the energy sector. In exchange, InnoEnergy offers varied and comprehensive support to its startups - from product and market (analyzing the competitors, assisting with enhancements, development, and pilots, providing access to R&D infrastructure, helping with a business plan, commercialization strategies, and the first customers) to people-side of the business and the finance - providing introductions to pre-seed and seed funding opportunities, VCs, business angels, and public funding. In its portfolio there are companies such as BeON, which created a microinverter plugs in to a wall socket like a house appliance, enabling a PV system to become DIY and changing the way we think about the solar business, and BeePlanet, developing energy storage solution based on 2nd life Li-Ion batteries
SYDA Ventures
Another Estonia-based, brand-new company- Syda Ventures is an impact investment fund, backing startups at pre-seed and seed stages. It is located in Tallin and has just begun its operations on the sustainable investments landscape, with expansion plans including screening deal flows in the whole Baltics and Finland. It was funded by experienced investors such as Lev Dolgatsjov, who is a President of Estonian Business Angel Network, and Olga Scheller, partner at Meemaeger Capital
RST Ventures For Earth
RST Ventures For Earth is a polish fund, co-financed by European Regional Development Fund and created in cooperation with PFR Ventures. They support seed and early-stage innovative companies that contribute to a sustainable environment, cleaner Earth, and wiser society. Their main area of interest is IoT, AI & ML, robotics, and software, or hardware, solutions for a cleaner environment. Investments' sizes vary from 1 to 4 mln PLN. They invested in companies such as Her Impact - an educational online platform supporting women to build their careers and develop business skills and Plenti - a platform offering access to the latest consumer electronics on demand.
Accelero Ventures
Accelero Ventures is a new addition to Poland's impact investing ecosystem. This VC fund aims to invest up to 4M PLN in minority stakes in pre-seed, seed, and series A companies from sectors such as CleanTech, BioTech, FMCG, and IT/ICT. They specifically look for disruptive innovations, with not only high growth potential and scalability but also a focus on clean technologies willing to contribute to the environment. Among their areas of interest, there are solutions such as renewable energy sources, energy efficiency management, and projects emerging at the intersection of the fields of biotechnology and green energy, particularly in the areas of biomethane and biohydrogen. Moreover, they are interested in companies working on IT innovations - Internet of Things, cybersecurity, and machine learning.
PurposeTech
Based in Prague, Czechia, PurposeTech is a pre-seed VC fund supporting purpose-driven technology startups in the CEE. The fund is sector-agnostic (with a particular interest in climatetech, edtech, and healthtech) and invests in founders with an unreasonable level of commitment, talent and ambition and those pursuing a for-profit business idea scalable through technology.
PurposeTech has three elements that make them stand out from the rest. First, they invest super early. Participating in angel or pre-seed rounds, the firm is the startup's very first investor and one of their most valued partners in their journey to change the world. Second, they are very hands-on. PurposeTech’s experts devote several hours per week to each of their startups, primarily assisting them in building an investable MVP with adequate traction. They are structured, evidence-based and always absolutely honest. Lastly, they open doors. Since being co-founded by the Impact Hub, PurposeTech has priority access to other purpose-driven investors, decision-makers, and mentors in the Impact Hub network. As a result, they provide introductions and open doors for their startups regularly.
Related Posts:
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The Psychedelic Renaissance Among Startups and VCs in Central and Eastern Europe (by Ilya Mikhalchyk-Kananenka, Community Builder, Vestbee)
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