Funding lifts for climate, health, people startups

While funding for impact startups has broadly declined, those operating in climate, health and people has seen funding levels improve compared to three years ago, according to the Impact Startups Benchmark Report 2025.

The study compiled by Giant Leap and Cut Through Venture found that in 2022, startups in climate, health and people raised 38.9% of total investment in early-stage startups in Australia. This increased to 55.6% in 2023 but dipped to 41.5% in 2024.

Climate dominates the funding rounds, attracting the largest portion of capital across the three years surveyed.

Last year, climate-focused startups received $1 billion - which is more than double the investment in health and five times that of people-related ventures.

This surge was attributed to strong corporate demand, regulatory tailwinds, and maturing technologies in areas such as carbon sequestration, energy storage and climate adaptation, the research found.

Health investment remained steady in 2024, with biotech attracting the most capital reflecting sustained demand for new therapies, rapid advances in AI-driven drug discovery and strong return potential from breakthrough innovations.

Globally, healthtech attracted US$67.8bn in 2024, up from US$61.7bn in 2023, making it one of the top-funded sectors behind enterprise software.

People-focused sectors, such as edtech, human resources, and diversity and inclusion-related innovations, faced a sharp pullback, reflecting investor caution around long sales cycles and tightening customer budgets. However, innovation in AI, especially in education, may refresh investor interest in this sector.

The research found that overall, capital is converging around purpose.

"Australia's investment landscape is evolving, with a growing number of both thematic and generalist funds now actively backing solutions to global challenges. Investor focus is converging around sectors such as climate, agriculture, deep tech, medical innovation and women-led startups, reflecting alignment with long-term opportunity and impact," the report read.

Rachel Yang, a partner at Giant Leap said the fact that impact startups have steadily grown their share of early-stage investment, signals strong and sustained investor conviction in the impact sector.

"This resilience is a clear sign that backing startups solving social and environmental problems is more than a trend; it's a long-term shift in capital priorities," she said.

Chris Gillings, founder of Cut Through Venture and venture capitalist at Five V Capital said: "It's incredibly encouraging to see our broader market data corroborate Giant Leap's findings, painting a robust picture of resilience and growing investor commitment within the Australian impact sector."

"This report captures a quiet but powerful signal: even as markets pull back, impact-led founders continue to attract support. It's a vote of confidence in businesses solving the world's hardest problems."