ESG demand driving investors towards venture capital

Stoic VC

More investors are turning to responsible investing strategies that allocate towards fledging companies in healthcare and technology, according to a venture capital firm. Stoic Venture Capital partner Geoff Waring commented he has seen more investors have been drawn towards investing in nimble and fast-growing start-ups that target environmental and social concerns, particularly climate change.The demand has risen from the public, large fund managers and individual wealth sophisticated investors, who are looking at allocating more to venture capital managers.“Recent disasters such as the pandemic and NSW floods and bushfires have led more investors even further towards socially responsible investing,” Mr Waring said.“Investors want to know that their money is working towards positive social goals and are seeking more rigorous reporting from companies about how they achieve those goals.”Another area investors are focusing keenly on is diversity and inclusion, in line with increasing concern about progress towards equality, he added. “Start-ups that rank higher in terms of diversity and inclusion are preferred among companies whose technology has positive social impacts,” Dr Waring said.“Investors understand that companies which prioritise gender diversity and supporting more inclusive places for LGBTQI+ are more socially sustainable in the longer term.”Venture capital firms that focus on economically viable solutions to environmental and social issues are expected to stand out from the pack.