Recent studies indicate that San Francisco and London have emerged as prominent global centers for venture capital (VC) investment in technology designed to address the United Nations’ 17 Sustainable Development Goals (SDGs), often called “Impact Tech.” Paris, Berlin, Stockholm, Shanghai, and Beijing follow closely behind these leading cities.

Investment in technological solutions for critical issues like the climate crisis and social disparities has experienced a substantial 280% surge in global VC funding between 2015 and 2020. Within this timeframe, both London and San Francisco witnessed more than a doubling of investment in this sector. This report was compiled by London & Partners and Dealroom as part of this week’s Silicon Valley Comes to the UK virtual event, utilizing data gathered from a survey of over 5,000 startups.

The research reveals that VC investment in London-based impact tech companies has increased by nearly 800% (7.8x) since 2015, a rate significantly higher than the 3.1x growth observed across Europe as a whole. The year 2020 is projected to be a record-breaking year for London’s impact tech sector, having already secured $1.2 billion in VC investment from January to October – matching the total for 2019. London-based impact firms have also completed 429 deals between 2015 and 2020, exceeding the number finalized in any other city worldwide.

San Francisco’s impact-focused tech companies have also demonstrated considerable growth over the last five years, with VC investment in these companies nearly tripling (2.8x) from 2015 to 2020. To date in 2020, San Francisco-based impact tech companies have attracted $1.7 billion in VC investment, representing the highest amount globally. Nationally, the United States has received more VC funding for impact tech companies than any other country in the past five years, with investors contributing $35.8 billion to U.S. firms since 2015 – double the investment seen in China ($16.8 billion) and the United Kingdom ($6.1 billion).

The research also highlights that London has fostered the creation of 241 impact startups since 2006, while San Francisco has seen the founding of 95 such companies. Prominent “impact unicorns” in London include Octopus Energy (focused on green energy), Arrival (developing zero-emission public transportation vehicles), Gousto (a food delivery service), and Babylon Health (an AI-driven health technology company).

Climate change mitigation and clean energy solutions have garnered the most investor attention in both cities, accounting for over 50% of total VC investment over the past five years. Funding rounds that included at least one North American investor totaled $234 million in London so far this year, up from $85 million in 2018, and representing one-fifth of all VC investment in London’s impact startups.

Examples of 2020 funding rounds for London impact companies with North American investor participation include a $118 million growth equity round for Arrival led by BlackRock, an $80 million Series B round for COMPASS Pathways, and a $25 million Series C funding round for Tractable.

Furthermore, impact startups are increasingly expanding operations across the Atlantic in both directions. Arrival is now active in Los Angeles, while Octopus Energy entered the U.S. market in September following a $360 million funding round in April and the acquisition of Silicon Valley-based Evolve Energy. Conversely, San Francisco-based Allbirds, a sustainable shoe retailer, launched its first European flagship store in London in July 2018.

Janet Coyle, managing director for business at London & Partners, commented: “San Francisco and London are recognized as global leaders in innovation and technology. These latest figures also demonstrate their pioneering role in establishing purpose-driven companies dedicated to addressing critical environmental and social challenges.”

The underlying data from the research is available below: