Lack of capital is a significant challenge for startups looking to make an impact — but it’s possible to overcome. There are many ways to tap into funding and start growing your business as a sustainability venture. Whether your product translates sustainability as climate tech, financial education, or social empowerment, there are several opportunities specific to your niche.
In this article, we’ll review the state of startup funding for sustainable initiatives, types of funding sources, and what you’ll need to get started
State of Sustainability Funding
Two-thirds of shoppers in the US are willing to pay more for sustainable products, but funding for eco-friendly startups hasn’t necessarily been growing. According to BloombergNEF, climate tech funding dropped by 12% in 2023, in part due to high inflation and interest rate hikes. That said, the United States remains the best-funded market for climate technology startups, followed by China and the European Union (EU).
Sustainability niches that were most successful over the last year focused on clean energy, batteries, and carbon capture. And, at least according to Crunchbase, the most active clean energy investors didn’t scale back from funding promising startups.
5 Types of Funding for Sustainable Startups
There are many ways to get the capital you need to jumpstart your startup and make an impact. In many cases, your startup will use a combination of funding sources, especially for early-stage and pre-seed ventures. Below, we’ve summarized 5 key ways to tap into capital.
1. Investor funding
Venture capital (VC) firms often offer a combination of both funding and expertise to startups looking to scale quickly. However, this type of funding is also extremely competitive, with only 0.05% of applicants receiving VC funding.
However, this method shouldn’t be overlooked. Applying to VC firms that focus on your sustainability niche, building a strong business plan, and highlighting your track record or product differentiation can improve your chances of success.
It’s also important to note that VC funding isn’t the only private investor option. Angel investors, institutional investors, accelerators, and incubators all offer opportunities for funding and fast growth.
2. Contests and Awards
There are also ways to win monetary and non-monetary resources to help you reduce costs. Sustainability-focused award programs, such as Wallet Max’s Bold World Awards, provide several resources for startups to optimize revenue. For example, the 2024 awards offer not only three startups cash prizes but also discounts to Forecastr, Airtable, Freshworks, and additional key tech stack solutions and free fundraising pitch reviews.
3. Grants
It’s also possible to apply for several types of grants. Not only are there industry-specific grants, but it’s also possible to get funding for minority-led startups. Diversity and inclusion startups can be based on gender, sexual orientation, race, ethnicity, or other status, such as being a veteran.
For example, Amber Grants for Women has funded several sustainable initiatives. The National Science Foundation (NSF) also offers grants to small businesses and startups for discoveries that benefit society.
Other programs, such as Google’s Sustainable Startup initiative, both fund and help develop accepted startups.
4. Crowdfunding
Crowdfunding and peer-to-peer funding offer startups another way to tap into capital and amass a potential customer base. Fundrise, WeFunder, I Fund Women, and Seedrs all provide a platform for startups and small businesses to gain investment dollars.
5. Self-funded
Finally, the most common scenario for early-stage startups is self-funding. Almost half of all startups that raised $100 million in funding started as self-funded projects.
What You Need for Successful Fundraising
Regardless of the funding source you approach, you will need many of the same things to obtain capital. To improve your chances of obtaining funding at any level, you will need a(n):
Solid business plan
Concise, well-illustrated pitch deck
The well-defined target consumer base
Proven track record, either with the current venture or earlier business experience
Strong and knowledgeable management team
Clear fundraising goals and how you will use the funds
Ideal valuation
Significant market opportunity
Get Funded with Our Bold World Awards
Wallet Max’s Bold World Awards offers startups cash and non-monetary resources for startups that align with environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDG) guidelines. From inclusive climate action to addressing food scarcity and sustainable fintech, these awards provide startups with guidance, technology, and cash to accelerate growth.
The terms and conditions are simple. Applicants:
Must not be a partner, sponsor, speaker, or affiliated with a Wallet Max employee or board member
Winners must prepare a 10-minute LIVE or pre-recorded speech to present at the Wallet Max Emerald Summit on April 26, 2024
Must be women-led startups, where women-identified members represent 50% of the leadership team. Number of employees: no more than 50
Must be legally registered and have been operating in your country of residence for at least one year.