VC Funding Vital for Global Sustainability

Notwithstanding the global economic uncertainties, global venture capital (VC) funding is on the rise. In 2024, global VC investment increased to $368.3 billion from $349.4 billion in 2023. This feat was also achieved in lesser deal counts than the preceding year. VC investors are not holding back, but are going bullish about investing in AI. The Americas region attracted the bulk of these VC investments, with a record number of multi-billion dollar deals in the AI space in Q4 2024.

VC investors are also showing keen interest in investing in alternative energy sources such as nuclear and hydrogen energy. As the need to invest and develop more sustainable alternative energy sources grow, fueled by areas like AI, generative AI, blockchain, and crypto – VC investors are leveraging on this growing space. In Q4 2024, two large deals were recorded in this space – China’s CNNP Rich Energy, a clean energy developer raised a substantial $1.1 billion, while US-based Pacific Fusion, an alternative energy developer raised $900 million.

VC investments play a crucial role, more so if it is directed towards sustainable and promising businesses such as social entrepreneurs. It can provide the much-needed capital push and also support, validating promising startups to advance their environmental and social innovation. By investing in responsible business models and green technologies, VCs can help bridge the gap between innovation and widespread adoption, furthering the realization of a sustainable future.

The VC Push

VCs are a force for good. Social entrepreneurs seeking capital for their ideas usually have limited choices. Most either self-fund their business or raise money through friends and family. Banks also often avoid investing in early-stage businesses citing higher risks. This is where VCs step in, funding some of the most promising social startups, while creating proportionate economic benefits in the process.

Lowercarbon Capital, for instance, supports companies that cut emissions and pull carbon out of the atmosphere, while buying us more time. Some of the interesting innovations that they have funded are into: extracting cheaper, faster, and greener lithium that uses 99% less land and water than conventional extraction methods; zero-carbon cement that is produced using room temperature and cheap renewables without compromising its performance; and food-transforming bins that transforms food waste into dried, odorless chicken feed or soil compost.

Meanwhile, Backstage Capital is a VC firm that provides capital to startups led by women, people of color, and LGBTQ+ individuals. Till date, they have invested in 200 companies led by underrepresented founders and they continue to do so. 

The Grantham Foundation invests in early-stage climate innovations that have the potential to reshape energy systems, enhance soil health, protect oceans from acidification, and develop solutions for direct carbon capture. They also make grants to journalists, NGOs, and scientists to drive environmental advocacy and applied research into climate solutions.

Other than creating a positive social impact, VC funding can also create good return-on-investments. A case in point being the recent successful closure of a new €320 million impact investing fund by Norrsken VC, a European VC firm. The latest fund surpasses its initial target of €250 million. The fund invests in potential unicorns that not only contribute positively to the society, but also achieve substantial financial returns.  

As an international think tank, Horasis is also playing a vital role by organizing events such as the 10th Horasis Global Meeting, which will bring together leaders from the government, private sector, and the civil society to harness the power of collaboration in finding solutions to the most pressing challenges we face. The event will take place in São Paulo, Brazil, between 7 to 10 October 2025.

Government Initiatives

Government intervention and supportive policies can be pivotal for the success of social enterprises. Government initiatives such as grants, low-interest loans and incubator programs can provide critical financial support for struggling social enterprises. 

Governments can also help create legal structures that recognize social enterprises, making it easier for them to operate, attract investment, and measure their social impact. By providing preferential procurement opportunities, governments can help facilitate market access for social enterprises, helping them reach a broader customer base.

More needs to be done. Governments can help advance social entrepreneurship by:

Laying the foundation for a new era of social entrepreneurship where quasi-public agencies are formed to create favorable environments for social entrepreneurships to thrive. And governments should set common performance standards, while creating a common platform to publish results. Governments can also encourage and sponsor award programs to recognize and reward innovative, effective and sustainable solutions.

Policymakers and government leaders can also encourage social entrepreneurship behaviors through current and future policies that do not present unforeseen barriers. Furthermore, they can also develop new tax structures to help spur greater philanthropic, private, and public investment in the development of sustainable models. 

Leveraging on both financial and non-financial resources such as seeking partnerships with foundations and corporations and creating a public-private social innovation fund. Governments can also help spur increased involvement of volunteers in scaling social solutions that work. Furthermore, governments can also earmark a small budget annually that can go towards social innovation funding.

Photo Caption: VCs can help bridge the gap between innovation and widespread adoption, furthering the realization of a sustainable future.