European Startups earn a 15 per cent sustainability premium, according to new research from Amazon

Early-stage investors are rewarding startups with strong sustainability credentials, according to new independent research commissioned by Amazon. European venture capital and private equity investors say those companies can command a 15 per cent valuation premium, demonstrating the opportunity for entrepreneurs who are building more sustainable products and businesses. Startups with a poor sustainability track record could see their valuation reduce by up to 8 per cent.

In the past 12 months, more than two-thirds of investors (71 per cent) have requested more details about the sustainability credentials of startups they are investing in, citing personal values and their own organisation’s ESG (Environmental, Sustainability and Governance) commitments as the driving factors.

More than half (52 per cent) of investors have declined a startup investment opportunity in the last 12 months due to concerns about a company’s sustainability credentials. When asked about what startups are lacking, investors cite concerns about the sustainability of their logistics throughout the supply chain and responsible waste management processes.

Seven in 10 also say the volume of current and upcoming ESG regulation is deterring them from investing in startups focused on sustainability. To take the next step, the vast majority of investors (84 per cent) say startups need better support to embed environmentally-sustainable practices, and 81 per cent say that over half of startups they see lack the right technology and know-how to operate more sustainably.

This research comes as Amazon and EIT Climate-KIC, Europe’s leading climate innovation hub, and WRAP, a leading UK climate action NGO, announce the 16 startups joining the second edition of the Amazon Sustainability Accelerator, following more than 1,500 applications.

“Our research shows the clear premium given to businesses with strong sustainability credentials and illustrates how environmental impact is increasingly guiding investment decisions, as investors seek out solutions to address today’s climate and waste challenges,” said Zak Watts, Director EU Sustainability, Amazon. “The Amazon Sustainability Accelerator is the ideal launchpad for high-potential startups, and we are proud to be helping a second cohort of founders scale their businesses to deliver innovative technologies and sustainable products.”

The two cohorts in the Accelerator include startups who are creating more sustainable consumer products and, for the first time this year, startups developing the technology to help businesses recycle products more effectively and efficiently. They were selected by a panel of experts in the venture capital and sustainability communities, and include:

Recycling Technologies

• Induo (FR) – a textile recycling technology company turning used textiles into brand new apparel
• Polyperception (BE) – a platform providing real-time, end-to-end waste flow monitoring to plastics and material recovery facilities
• Terrawaste (NL) – a chemical recycling technology turning non-recyclable dry, wet and mixed plastic waste into valuable, carbon-negative materials
• Matoha (UK) – material identification devices that help with efficient waste sorting
• Sorted (UK) – AI-powered solutions to help waste management companies sort their recyclable materials
• Descycle (UK) – a metal processing technology company developing novel and low-impact solutions using revolutionary chemistry

Consumer Products

• Open Funk (DE) – a sustainable, high-performance, compact kitchen mixer for glass jars
• Papair (DE) – recycled paper bubble wrap providing a sustainable packaging alternative to conventional bubble wrap
• We Do Solar (DE) – a smart solar set that can be installed in balconies
• FUNQ (ES) – a syrup-based soft drink which allows anyone to turn tap water into a delicious beverage, reducing the need to ship water
• Infinite Athletica (ES) – a circular sportswear company turning sport waste into garments for the same sport
• Nimbi (UK) – a compostable razor using revolutionary biomaterials
• Milky Plant (UK) – a device that allows people to create their own plant-based milk from home. reducing the need to ship cartons
• Seep (UK) – plastic-free sponges, cloths and other household essentials
• Tangle (UK) – sustainable dog products such as collars, leashes and toys made from upcycled ghost fishing nets
• Bo (UK) – an urban e-scooter company with world-first riding technology, building efficient commuter vehicles

“Fundraising is hard as a startup and it’s an issue we continue to face. We were drawn to Amazon’s Sustainability Accelerator because it recognises the value of our product and what it can do for the planet,” said Martin Holicky, Co-Founder and CEO, Matoha Instrumentation.

“Investors increasingly making decisions based on impact data is an important signal to businesses to embrace an active role in societal transformation," said Dr. Kirsten Dunlop, Chief Executive Officer, EIT Climate-KIC. "By equipping emerging startups with the tools to measure their climate mitigation potential and supporting their capacity to think systemically, we can foster a critical cultural shift in business mindsets, while helping to build the robust data that can direct investments to transformative and scalable climate solutions. At EIT Climate-KIC we are excited to expand the Amazon Sustainability Accelerator, supporting more entrepreneurs to reach their greatest climate impact potential.”

Harriet Lamb, CEO, WRAP, said: “We are proud to support these early-stage sustainability innovators as they scale their businesses. We need pioneering product development and new approaches to recycling infrastructure as we seek to shift away from our wasteful world. WRAP is thrilled to be part of the accelerator seeking to increase investment in recycling technology and the products of the future, helping to drive advancements in the recycling sector, discovering and supporting cutting edge solutions.”

The Amazon Sustainability Accelerator is a 12-week bespoke programme designed to help founders navigate the challenges of starting and scaling a sustainable business. It will include expert-led virtual and in-person workshops, specialised mentorship, a tailored curriculum, and access to a network of like-minded founders. Amazon and EIT Climate-KIC will work in collaboration to guide Accelerator participants through a Climate Impact Forecast where they will assess their business’ climate impact, and develop strategies to improve their environmental footprint.

They will also get a financial boost with a €‎10,000 equity-free grant and US$25,000 worth of AWS Activate Credits, to help them access cloud computing services; meet and work with Amazon leaders; and access free office space at Amazon’s headquarters in London and Berlin. Participants in the Consumer Products cohort will also receive free access to Amazon Launchpad for one year.

Following the Accelerator, all startups will have the opportunity to pitch their business to an audience of seasoned investors to help them build connections and raise further funding. Last year’s European Accelerator startups, raised more than €‎4.5 million, and increased sales on and off Amazon by an average of more than 250 per cent following their participation in the Accelerator.

Read more about the impact of the Amazon Sustainability Accelerator on last year’s cohort.