The Rise of Impact Investing and M&A in the ESG Data, Analytics & Software Space
In recent years, the world has witnessed a significant shift towards sustainable and responsible investing. ESG considerations have gained prominence among investors and corporations alike, which has not only influenced investment strategies, but also fuelled the growth of the ESG data, analytics, and software sector.
Impact investing, an approach that seeks to generate both financial returns and positive social and environmental impact, and which actively seeks to invest in businesses that deliver measurable social or environmental benefits, has gained significant traction among capital providers and acquiring businesses alike. The key pillars of investing for impact are climate change mitigation, the circular economy, climate change adaptation and social inclusion.
This article explores the increasing prominence of the growth in importance of impact investing in Tech funding and M&A transactions, where companies align their financial goals with their commitment to creating a sustainable and equitable world.
Funding and M&A as a Catalyst for Social and Environmental Impact
M&A and capital raise funding transactions present an ideal opportunity for companies to scale their impact by combining forces. Recent deals in the ESG technology sector exemplify this paradigm shift, as companies secure funding to drive sustainable change.
Dedicated ESG-focused funds have emerged to cater specifically to the growing demand for investments aligned with sustainability objectives. These funds seek to invest in companies that prioritize ESG factors and rely heavily on robust ESG data and analytics. Fund managers are raising capital to launch and expand such funds, leveraging the rising interest in ESG investing.
Impact investor outcomes and mergers and acquisitions can create synergies, amplify social and environmental outcomes, and drive transformative change. By acquiring or merging with purpose-driven businesses, companies can expand their reach, leverage shared expertise, and accelerate their positive impact. This comes at a time when the global impact investing market is set to be growing at a CAGR of 9.5% during the forecast period 2022-2031 and projected to reach $6 trillion in 2031.
Traditional venture capital firms, private equity funds, and companies are increasingly participating in M&A deals that align with their social and environmental objectives. This ecosystem’s growth enables impact-driven businesses to access the necessary capital, resources, and expertise to thrive and make a meaningful difference.
Impact Investing Funding and M&A
The rise of impact investing funding and M&A activity in the ESG data, analytics, and software space presents opportunities for established companies to enhance their ESG offerings, while also raising questions about the potential consolidation of the industry. Here we highlight some of the successful funding rounds and M&A transactions, underscoring the growing importance of ESG data management and analytics in the global investment community.
ESG Technology Funding Rounds
Measurabl raises $93 million in Series D Funding
Measurabl, an ESG data platform in the real estate space recently announced it had raised $93 million, in a Series D Funding tranche co-led by Energy Impact Partners and Sway Partners, allowing the platform to further enhance its market-leading ESG technologies, expand its new geographies and ensure the real estate industry has the investment grade data necessary to transition to a sustainable future.
Omnevue secures $3.1 million in Seed Funding
London-based software engine, which provides audit-grade ESG accounting for companies, raised $3.1 million in a seed funding round led by venture capital firms Elbow Beach Capital and Pi Labs. Omnevue connects to a company’s financial, HR and other data sources before collecting, analysing, and generating reports aligned to international accounting standards.
Reask raises $6.6 million in Seed Round
Reask, which provides high resolution weather risk analytics and forecasting by applying AI across multiple sources of climate data, raised a total of $6.6 million in a seed round led by Mastry Ventures and Collaborative Fund. The platform provides critical insights and intelligence to insurers and asset managers which need more accurate weather catastrophe forecasting.
ClimateView raises €14 million in Seed Funding
Sweden’s ClimateView raised €14 million to enhance its climate action plans in over 30 cities. The climate action start-up’s platform’s latest funding round will fuel the development of its climate finance platform and further climate adoption, as part of the EU’s innovative program.
EcoChain secures €3 million in Funding Round
EcoChain, a Dutch climate tech that enables manufacturers to produce more sustainable products using the Life Cycle Assessment (LCA) software secured funding in a round led by the Impact Fund Phase2.earth and supported by its existing investor, Volta Ventures. EcoChain’s solution solves the lack of data and insights currently faced by product producing companies.
Novata Raises $30 Million in Series B Funding
In March 2023, Novata, a technology platform and public benefit corporation focused on ESG, successfully closed a Series B funding round, raising $30 million. Novata specialises in providing private markets with data management and analytics solutions, enabling investors to align their capital flows with their ESG priorities. The funding round, led by Hamilton Lane, drew participation from prominent investors, including the Ford Foundation, S&P Global, Clearlake Capital, and Kohlberg & Company. This funding will further empower Novata to expand its offerings and support investors in integrating ESG considerations into their decision-making processes.
ESG Technology M&A Deals
Source Intelligence Acquires Supply Chain Compliance Platform ChainPoint
An industry-leading software provider of supply chain compliance and ESG management solutions announced the acquisition of ChainPoint, a software platform for monitoring and securing supply chains. It allows users to manage and share product, process, and supplier information. The acquisition enables Source Intelligence to expand its European presence and allows the two companies to better serve their clients in managing and improving sustainable supply chains.
ESG Data Intelligence Platform DeepKi Acquires Nooco
DeepKi a world leading ESG platform for real estate, announced the acquisition of Nooco a French SaaS company known for its expertise in carbon footprint measurement and optimisation in building projects. The acquisition will help Deepki to provide comprehensive analysis throughout a building’s lifecycle.
Cority Acquires Sustainability and ESG Software Platform WeSustain
Germany-headquartered specialist provider of enterprise sustainability and ESG software, WeSustain was acquired by Cority, a provider of EHS software, to propel its European market expansion. WeSustain is a smart software platform that combines decentralised sustainability management with data collection, making it easy for professionals in sustainability, EHS and finance to break down silos.
Apexanalytix Acquires leading Supply Chain Risk Platform ESG Enterprise
Apexanalytix, a leading provider of global supply chain risk management data, software and services acquired ESG Enterprise, which uses AI to maintain a map of ESG characteristic across global supply chains, to help companies assess the ESG attributes of their supply chains significantly fasts and more accurately than other ESG assessment methods.
GRESB Acquires Asset Resolution to Strengthen Climate Data Analytics
GRESB BV, a globally recognised ESG benchmark for infrastructure and real estate investments, recently acquired Asset Resolution, an asset-based climate data and analytics provider for financial institutions. This strategic acquisition expands GRESB’s asset-level data coverage across hard-to-abate sectors, enhancing its assessments and tools. GRESB’s members will benefit from actionable insights and enhanced support for asset-driven analysis, enabling them to assess and manage climate-related risks more effectively. This acquisition underscores GRESB’s commitment to providing comprehensive ESG intelligence to drive sustainable investment practices.
Book an M&A Consultation
By merging profits with purpose, companies can drive positive change, create shared value, and align their financial goals with their commitment to social and environmental impact. Impact investing M&A transactions provide opportunities for companies to scale their impact, access capital, and leverage shared expertise, ultimately contributing to a more sustainable and inclusive economy.
As impact investing continues to grow, we can expect to see even more M&A activity driven by the desire to combine financial success with meaningful positive change. Want to discuss your M&A requirements? Get in touch with one of our specialist M&A Advisors here.
Author: William Berrington
William is a highly experienced M&A advisor with a particular emphasis on ESG and HR Technology globally. His previous assignments include working with leading businesses in ESG (Environmental, Social and Governance) software and data and HR Technology (HR Tech).
William has previously advised on Technology sector M&A transactions in more than 12 countries, working on transactions on the sell-side and buy-side. He was a Chartered Accountant and before Goldenhill and worked in several corporate development roles for blue chip technology companies and also for a private markets firm.
If you are an owner or senior executive of a Technology business interested to discuss how M&A could help you accomplish your objectives – please get in touch with William below.