New report reveals Australian impact startups hold strong amid market downturn
Despite a broader contraction in venture capital activity, Australia’s impact startup sector has demonstrated remarkable resilience, according to the newly released Impact Startups Benchmark Report 2025 produced by Giant Leap in collaboration with startup data provider Cut Through Venture.
The report draws on proprietary data from Giant Leap analysis of more than 2,800 startup deals over the past three years and a cumulative 10,000 companies over Giant Leap’s history. It also correlates this with Cut Through Venture’s broader industry data.
It reveals that while total startup funding volumes have dipped across the broader ecosystem, impact sectors encompassing Climate, Health and People, have steadily grown their share of early-stage investment.
Startups solving social and environmental challenges comprised 41.5% of all early-stage investment in 2024, up from 38.9% in 2022, peaking at 55.6% in 2023.
“The fact that impact startups have steadily grown their share of early-stage investment, signals strong and sustained investor conviction in the impact sector,” Rachel Yang (pictured), Partner at Giant Leap said.
“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.”
Climate dominated funding, attracting the largest portion of capital across the three years surveyed. According to the data, Climate-focused startups received $1 billion in 2024, 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.
Health investment in Australia 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. While digital health faced headwinds due to commercialisation challenges and complex reimbursement dynamics, long-term drivers like chronic disease and an ageing population continue to anchor growth.
Elsewhere, people-focused sectors, particularly edtech, human resources, and diversity and inclusion-related innovations faced a sharp pullback, reflecting investor caution around long sales cycles and tightening customer budgets. Innovation in AI, especially in education, may refresh investor interest in this sector.
Yang added, “With greater policy certainty following the recent federal election, we expect climate tech investment to continue gaining momentum. The government’s ongoing commitment to long-term clean energy targets and public funding is set to attract more institutional capital into climate-aligned assets, strengthening the sector and driving green jobs and innovation.”
“We’re also excited for the potential of AI in tackling real human challenges. Today’s capital is flowing rapidly toward AI that monetises attention, often with little discernment between fleeting novelties and genuine solutions. But over time, we believe this trend will correct, and lead to some truly innovative and groundbreaking businesses.”
Chris Gillings, Founder of Cut Through Venture, and Venture Capitalist at Five V Capital added, “At Cut Through Venture, we’re passionate about providing clear, data-driven insights into the startup landscape. 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.”
