10 trends for startups to watch in 2022 and beyond (Trend 1)

The world’s weather is getting more unpredictable. Temperatures are reaching record highs, as are sea levels. Water is increasingly becoming a scarce resource, as is food in many low income countries, while the fight to own and control many resources rumbles on, from rare earths to toilet paper. Global waste has increased ten-fold in the last century. ‘Make, use, and throw away’ had become the mindset of many in the early years of the 21st century, but increasingly consumers are becoming more conscious of the challenges, choosing more natural and environmentally friendly products. Businesses too are being held to account for their environmental and social impact as well as their choices about resources and governance structures. At the same time, the pandemic and demand shifts along with geopolitical tensions have added to pressures on resources and disrupted supply chains.

Today humanity uses the equivalent of 1.7 Earths to provide the resources we use and to absorb our waste (source: https://www.footprintnetwork.org/our-work/ecological-footprint/), up a horrifying 13% since 2015. By 2050 the rate will be 2 or more times, unless we change our collective behaviours.

The number of people wanting to shape the debate around resources, including talent, and climate change is growing rapidly. Yet, despite tough climate negotiations in global forums such as COP 26, and promises and plans on resources and the environment, often these don’t add up or get acted upon. While many decisions at COP 26 were flimsy or watered down, by omission in some cases, decisions were made – for example, the world is choosing not to act on the threat to survival of some small island nations. Addressing these urgent challenges seems to be a never-ending story of words without real commitment. How do we make a difference?

What does this mean for startups?

• There are many market opportunities: There is a huge demand for solutions to the pressing resource, environmental and climate challenges the world is facing.

• Choose your target market – your paying customers – very carefully: Don’t count on the united support of governments around the world to pay the price for these solutions as collective action moves at a glacial pace and many commitments to change have faltered over time. Rather, look for active supporters such as larger organisations or city/regional institutions to start to drive the change we need – and deliver the revenues you need to grow.

• Plan for resource scarcity – think lean: As a startup, until you get funding, resources are by definition scarce. But plan very carefully around the resources you will need to grow and scale the business in future. There is increasing competition for scarce resources from natural resources to talent and prices may increase over time. Understand the trends around these resources and build your financial forecasts and resource acquisition plans accordingly. Also consider partners for critical resources.

• Even if your startup is not addressing the resource, environmental and climate challenges directly, be transparent about the impact and practices of your business: Increasing numbers of consumers/customers – and investors – are focusing on the impact your business will create environmentally, socially and in terms of governance (ESG). In 2020, ESG funds raised $51.1 billion of net new money, a record and more than double the $21 billion raised in 2019 (source: Morningstar). Communicate clearly about how you are managing this impact, how you are going to mitigate it over time as you scale and how you are contributing to a more positive future for the planet.

• Choose your investors, advisors and team wisely: Our Activate Ventures programmes always emphasise the need to seek smart money – advisors and investors whose interests, commitments and values align with those of your company. As resources, the environment and climate change continue to dominate headlines, make sure you have the experience and expertise on your team that can help you manage these challenges.