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Claudine Owens: Northern Ireland likely to follow the trend for increased investment in ‘impact' start-ups

We are seeing an increasing number of investment opportunities, such as ESTHERSustainIQDECOM Engineering and StormHarvester, all of which have an ESG focus - many of these have pitched to HBAN (Halo Business Angel Network).

(Image showing: Ailís Mone and Carol Rossborough, founders of pocket-to-pocket giving app ESTHER)

During COP26, a report was released by Dealroom and the UK’s Digital Economy Council showing that UK start-ups which focus on the environment and sustainability raised £2.3bn in the past year, up from £1.7bn a year earlier and £1.57bn in 2019.

That report said numbers were boosted by a wave of investment in clean energy companies, but analysis of these so-called “impact” start-ups also covered health, security, climate change and energy scarcity.

The focus on ESG has also noticeably ramped up in Northern Ireland, both in terms of the types of new ventures we see pitching for investment to HBAN Ulster’s business angel network, and in what the investors themselves are looking for when it comes to adding start-ups to their portfolios.

For example, we heard a pitch from ESTHER, a pocket-to-pocket giving app that is enabling people and businesses to directly and privately give funds to the poorest people in their city. Co-founders Carol Rossborough and Ailis Mone were driven by a desire to enable people to help those in need in their own community in a direct way rather than through a charity.

Another company that attracted investment is Sustain IQ, who have created an online platform to help organisations harness data on their sustainability performance to make strategic decisions that drive business improvement. Co-founders Liam McEvoy and Maria Diffley saw the challenges facing organisations looking to operate in a more sustainable manner.

ESG is also a growing consideration for our more than 120 members, who are not only keen to invest in companies who do things the right way for moral reasons, but also because they recognise that businesses who are tapping into what matters to consumers in terms of the environment or ethical business are the ones with the greatest potential for immediate and long-term growth, and as a result, good returns. As with consumers, the questions they are asking are changing.

Investment trends in the rest of the world show that investment in ESG-focused businesses is on the rise. Dealroom’s report said the UK has seen 164 “impact finance” funding rounds this year, along with 58 in Sweden, 75 in France, 99 in Germany and 476 in the US.

This trend has led HBAN, the umbrella group responsible for the development of business angel investment, to launch its own new Impact Syndicate, which plans to invest €10M in ESG start-ups on the island of Ireland over the next three years.

With the talent and innovation we have here in Northern Ireland’s start-up ecosystem, I expect to see many more impact investments being announced here soon.