The holiday season is when Americans donate the most, but did you know you can do good and make money all year long?
At Kingscrowd, we distinguish two types of companies that help investors align their values with financial growth:
  1. ESG Initiative Startups
    These companies may not directly improve the world through their products but strive to reduce negative externalities through Environmental, Social, and Governance (ESG) policies. For example, an employee-owned brewery (e.g. Left Hand Brewing Company), a tea company applying regenerative agriculture practices, or a golf t-shirt brand donating a portion of profits to charity fits this category.
  2.  Impact Startups
    These companies directly address environmental or social challenges through their products. Environmental Impact startups develop solutions like biobased plastics (e.g. Timeplast), vegan meat alternatives (e.g. Blackbird Foods), or clean energy storage (e.g. Qnetic). Social Impact startups focus on innovations such as making schools safer (e.g. Ajai Robotics), supporting recovered alcoholics (e.g. Loosid), or helping low-income students access scholarships.
    This holiday season, we analyzed how these startups performed throughout the year:
  • Funding Performance: Startups with ESG initiatives and impact-focused products consistently raised more funds than their non-impact peers when comparing medians. However, the average amounts raised favor non-impact companies due to a few outliers securing tens of millions. Overall, impact startups have higher chances of attracting significant investor interest.
  • Investor Participation: ESG and Impact startups typically attract more individual investors, with higher median counts than non-impact startups.
  • Revenue and Valuation: ESG startups report median revenues twice as high as those without ESG initiatives, suggesting they tend to adopt these policies at more advanced stages. Interestingly, their valuations remain lower, making them potentially better value investments.
  • Environmental Impact Multiples: Environmental Impact startups often show higher revenue multiples because they operate in deep-tech industries, requiring substantial capital investment over many years before generating revenue.