Claudine Owens: Northern Ireland likely to follow the trend for increased investment in ‘impact’ start-ups

Ailís Mone and Carol Rossborough, founders of pocket-to-pocket giving app ESTHER
Ailís Mone and Carol Rossborough, founders of pocket-to-pocket giving app ESTHER

INCREASINGLY there is a focus not just on what a business does, but also on how they do it.

Customers want to know what the brands and suppliers they buy goods and services stand for and are increasingly prepared to pay a premium if they feel like they are making a difference by choosing a more ethical brand.

Evaluating a company’s impact on society and the environment – now often tagged as Environmental, Social and Corporate Governance, or ESG – isn’t new, but the issue has moved into the spotlight, and the public consciousness, in recent times.

During COP26, a report was released by Dealroom and the UK’s Digital Economy Council showing that UK start-ups which focus on the environment and sustainability raised £2.3bn in the past year, up from £1.7bn a year earlier and £1.57bn in 2019.

That report said numbers were boosted by a wave of investment in clean energy companies, but analysis of these so-called “impact” start-ups also covered health, security, climate change and energy scarcity.

The focus on ESG has also noticeably ramped up in Northern Ireland, both in terms of the types of new ventures we see pitching for investment to HBAN Ulster’s business angel network, and in what the investors themselves are looking for when it comes to adding start-ups to their portfolios.

A number of businesses have come through our HBAN pitch events which have sustainability, environment and society at the heart of their proposition.

For example, we heard a pitch from ESTHER, a pocket-to-pocket giving app that is enabling people and businesses to directly and privately give funds to the poorest people in their city. Co-founders Carol Rossborough and Ailis Mone were driven by a desire to enable people to help those in need in their own community in a direct way rather than through a charity.

Another company that attracted investment is Sustain IQ, who have created an online platform to help organisations harness data on their sustainability performance to make strategic decisions that drive business improvement. Co-founders Liam McEvoy and Maria Diffley saw the challenges facing organisations looking to operate in a more sustainable manner.

Elsewhere in the HBAN portfolio, Decom Engineering is winning contracts around the world for its green decommissioning solutions, which include a pipe coating removal system that enables industrial companies to recycle downgraded oil and gas pipes during the decommissioning of old plant and pipelines, improving the safety, efficiency and environmental results in the sector.

Similarly, green tech firm StormHarvester has developed an automated water management software platform to help address sewage pollution, flooding risk and water scarcity. Intelligent Sewer Suits, which monitor and manage assets in drainage networks, has attracted much interest and the business is in the process of creating 16 new jobs.

ESG is also a growing consideration for our more than 120 members, who are not only keen to invest in companies who do things the right way for moral reasons, but also because they recognise that businesses who are tapping into what matters to consumers in terms of the environment or ethical business are the ones with the greatest potential for immediate and long-term growth, and as a result, good returns. As with consumers, the questions they are asking are changing.

Investment trends in the rest of the world show that investment in ESG-focused businesses is on the rise. Dealroom’s report said the UK has seen 164 “impact finance” funding rounds this year, along with 58 in Sweden, 75 in France, 99 in Germany and 476 in the US.

This trend has led HBAN, the umbrella group responsible for the development of business angel investment, to launch its own new Impact Syndicate, which plans to invest €10M in ESG start-ups on the island of Ireland over the next three years.

With the talent and innovation we have here in Northern Ireland’s start-up ecosystem, I expect to see many more impact investments being announced here soon.

:: Claudine Owens is HBAN Ulster lead coordinator and investment manager for Clarendon Fund Managers