Editor’s Note
This article was adapted by EUVC from an original insight published by Better Society Capital.
What impact startup founders want from venture investors
Impact ventures are early-stage, technology-enabled startups that aim to improve people’s lives or the planet through their core products or services. For limited partners (LPs), they offer a way to invest in organisations pursuing a fairer, more sustainable future while seeking to meet financial risk and return objectives.
Big Society Capital, now Better Society Capital, brought together three co-founders and CEOs of venture-backed businesses to discuss how founders see impact and investment: Jimmy Williams of Urban Jungle, Nat Whalley of Organise and Tony Jamous of Oyster.
All three said impact sits at the heart of their businesses. Their shared argument was that commercial success is directly connected to the impact they create for people, making investor alignment a practical company-building issue rather than a separate concern.
Key takeaways
Impact and commercial value can reinforce one another when the mission is embedded in the core business model.
Impact-aligned investors help protect the mission, but there are not yet enough impact managers to fill every funding round.
Traditional VCs still influence market confidence, especially around valuation and later-stage scaling.
Impact credentials are not enough on their own: founders also need investors with strong business-building expertise.
Impact works when it is part of the business model
The founders described impact as central to their organisations, not an activity that sits alongside the business. In their view, social mission should shape how the company operates, and impact and revenue should remain intrinsically linked.
They also expected impact to become more important as their businesses scale, reflecting growing interest from large institutional investors in allocating capital to impact.
For related reading, How impact drives business value creation explores the mechanisms through which positive outcomes and commercial performance can reinforce one another.
Why founders want impact investors on the cap table
The founders saw value in having impact investors at every stage of fundraising. Strong alignment between founders and funders can reduce the risk of conflict over the company’s mission as it grows. Some had declined investment when potential funders did not understand that mission.
“Ideally, all capital would be impact capital.”
The practical constraint is supply: the founders said there were not enough impact managers to provide aligned capital at every stage.
Why traditional VCs still matter
Impact-focused capital may be the preference, but traditional, finance-first VCs still hold considerable influence. The founders said having established traditional investors on the cap table early can give the market confidence in a startup’s valuation, which can matter as the business scales.
This creates a tension. Impact startups may want impact investors, yet sometimes need traditional investors. At the same time, the perception among some VCs that impact implies lower returns can make the first investment harder to secure.
Why more VCs need to engage with impact
The founders identified three reasons for venture firms to build credible impact capabilities:
Founders may become more selective. As more impact ventures scale successfully, new founders may increasingly favour impact-aligned VCs.
Capital is shifting towards impact. Impact ventures may be well placed to compete as more mainstream capital seeks impact exposure.
Disengagement creates a talent risk. Traditional firms may lose investors who leave to join or create more mission-aligned impact funds.
Impact VCs need business-building credentials too
Alignment matters, but it cannot come at the expense of practical expertise. Good VCs contribute far more than capital, and in the early years the right investor can make a material difference to a company’s prospects.
For founders, the ideal impact investor combines credible impact expertise with the ability to help build and scale a business. The related VC Impact Playbook offers a practical framework for embedding impact across sourcing, selection and portfolio support.
About the original author
Author: Better Society Capital
Role: UK social impact investor
Company: Better Society Capital
Better Society Capital is a UK social impact investor focused on increasing investment in solutions to social issues and inequalities. It works across areas including housing, employment, healthcare and the environment, connecting capital with organisations and investment opportunities that aim to deliver both social outcomes and financial returns.
Source
This article was adapted by EUVC from an original article published by Better Society Capital.
