ESG Startups Secured 41.5% of Early-Stage VC in Australia in 2024

ESG startups had strong venture capital funding in Australia during 2024, at 41.5% of total early-stage investment deals, in line with the Impact Startups Benchmark Report 2025. The report, generated through consolidation of data from impact investor Giant Leap and more than 2,800 startup investment deals over the last three years, indicates a consistent trend of investment in companies that treat social and environmental problems.

Although slightly lower than 55.6% in 2023, 41.5% in 2024 represented a slight increase on 38.9% in 2022. This is a repeat indication of enthusiasm on the part of investors for firms that are ESG-oriented and in this case with a particular concern for climate.

Climate technology startups, as a whole, were the most popular with funding in 2024, attracting roughly $1 billion in early-stage venture capital. That was double what was spent on health-related startups and five times that on people-related startups that tackle challenges such as diversity and inclusion. The growth in climate tech investment is attributed to increased corporate demand, understanding policies by governments, and continued advancements in clean energy, carbon capture, and storage.

The pledge by the Australian government to maintain long-term clean energy objectives and public funding has been central in energizing additional institutional capital into climate-compliant sectors. The actions will further enable the emergence of new employment opportunities and spur green technological innovation.

While climate tech experienced an influx of capital, healthcare startups posted zero growth in 2024, particularly in the biotech sector. Startups that focused on diversity and inclusion, however, experienced investments declining sharply owing to slower sales cycles, low budgets, and risk-off investor behaviors.

Artificial intelligence (AI) continued to shape investment trends across sectors. While current application of AI leans towards short-term and attention-centric models, AI nonetheless holds the promise of addressing urgent societal and ecological issues. The report indicates that in the long term, capital might shift ever more disproportionately towards such AI applications with longer-term promise.

The surge in ESG-oriented investment is consistent with a broader global trend in finance and entrepreneurship. Investors are ever more seeking long-term sustainability and ethical leadership as prime measures of a startup's success. This is particularly pertinent in Australia, where issues of climate change and the environment are high-stakes public and policy concerns.

Success by ESG startups in 2024 also reflects the growth and rising competitiveness of the impact investing universe in Australia. The persistent investment of nearly half of all early-stage capital in impact-driven companies is an indication of a change in venture capitalists' strategy, who are becoming more open to investing in firms with social missions alongside high growth aspirations.

With increasing government subsidies and corporate partnerships, ESG startups, especially climate-focused startups, are poised to be a significant force in the startup investing sector in the next two years.

Source:
Impact Startups Benchmark Report 2025, based on Giant Leap investment data. Written by Jithin Joshey Kulatharayil and published on KnowESG on 16 June 2025.