Australian impact startups are holding strong amid the current market downturn, a new report looking at early-stage investment has shown.
The report, Impact Startups Benchmark Report 2025, shows startups in climate, health and people-related areas are getting more early-stage Australian investment. Startups solving social and environmental challenges were shown to comprise 41.5 per cent of all early-stage investment in 2024. This is above 38.9 per cent in 2022, but still much lower than 2023’s peak of 55.6 per cent.
Produced by Melbourne impact investor Giant Leap, the data was gathered from more than 2,800 startup deals over the past three years. The data is also correlated with Cut Through Venture’s broader industry data.
Looking at key areas of impact business, climate startups reigned supreme, with $1 billion invested in 2024, which is more than double the investment in health and five times the amount that went to people-related ventures.
Health investment remained steady in 2024 in Australia, and biotech attracted the most capital.
Meanwhile, edtech, human resources and diversity and inclusion-related innovations saw a sharp decline in investment, possibly due to investor caution around tightening customer budgets with inflation on the rise.
“Investments in people have seen lower investor appetite, in line with global cooling across edtech and HR tech,” the report’s authors write.
“While both sectors attracted significant interest during the pandemic, many businesses have struggled to scale sustainably with long sales cycles, customer acquisition challenges and economic pressures exposing weaknesses in the underlying business models.”
However, a growing interest in AI capabilities, especially in education, could refresh investor interest in this sector, the report notes.
Speaking to the report’s findings, Giant Leap partner Rachel Yang said they are expecting “climate tech investment to continue gaining momentum”.
“The 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,” said Yang.
“The fact that impact startups have steadily grown their share of early-stage investment, signals strong and sustained investor conviction in the impact sector. This resilience is a clear sign that backing startups solving social and environmental problems is more than a trend; it’s a long-term shift in capital priorities.”
Women founders and social impact
Research has long shown that female-founded startups are more likely to create social impact that supports others in their community.
It’s also been shown female founded startups are more likely to get funding when they emphasise the social mission of their business.
A Harvard Business School study of 43 ventures found that on average, female-led ventures were perceived as less viable than male-led ventures. However, female-led ventures were able to avoid this gender penalty when they more heavily emphasised their social impact.
In February, Cut Through Ventures released the 2024 State of Startup Funding report showing 98 per cent of funding went to start-ups with at least one male founder, with just two per cent of total capital raised in Australia going to all female founded teams.
This is despite research showing female-led startups generate more revenue for each dollar invested.