ESG Startups Captured 41.5% of Early-Stage VC in Australia in 2024
Climate technology startups outstrip other sectors in venture capital funding in Australia.
Growing corporate interest and supporting policies are providing a fillip to climate startups.
AI has permeated almost all sectors.
According to a new report, environmental, social, and governance (ESG) startups, particularly focusing on social and environmental issues, attracted 41.5% of all early-stage venture capital (VC) in Australia in 2024.
The report, Impact Startups Benchmark Report 2025, has been published based on data from impact investor Giant Leap and more than 2,800 startup investment deals over the course of three years.
For every $10 invested, nearly $4 went to startups focused on environmental and social challenges, the report notes.
Nevertheless, the percentage — 41.5% for 2024 — is slightly higher than the 38.9% share logged in 2022 but lower than the 55.6% recorded in 2023.
READ MORE: Climate Technology: The Path to Net Zero and Sustainability
When it comes to individual sectors, climate-focused startups outstrip others by attracting $1 billion in 2024 alone. This figure is double the investment health startups drew and 5 times more than people-focused startups acquired.
Rachel Yang from Giant Leap said climate technology is gaining momentum owing to growing corporate interest, government policies, and technological progress in climate adaptation, carbon capture, and energy storage.
She said, "With greater policy certainty following the recent federal election, we expect climate tech investment to continue gaining momentum."
"The Australian government’s ongoing commitment to long-term clean energy targets and public funding is set to attract more institutional capital into climate-aligned assets, strengthening the sector and driving green jobs and innovation," she added.
While investments in health startups stagnated in 2024, particularly in biotech, other areas saw shifts.
ALSO READ: Barclays’ Climate Arm to Invest £500m in Climate Tech by 2027
In the meantime, diversity and inclusion-focused startups saw a sharp drop in attracting capital due to long sales cycles, reduced budgets, and growing investor wariness. However, the influence of artificial intelligence (AI) could rekindle investor morale, says the report.
“We’re also excited for the potential of AI in tackling real human challenges," Yang said.
“Today’s capital is flowing rapidly toward AI that monetises attention, often with little discernment between fleeting novelties and genuine solutions. But over time, we believe this trend will correct, and lead to some truly innovative and groundbreaking businesses," Yang concludes.
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