Impact Orientation: Breaking it Down to the Core
Business plans, investors, product development – as a founder, you are extremely challenged. So why on earth should you care about yet another topic? Because you can benefit tremendously, if you integrate impact orientation from the start, access to impact investors being one of them. Read on for more!
Impact orientation can be the solution to many of your challenges as it relates to all areas of entrepreneurship and, most importantly, promises to lead to an alignment of all your activities. It helps you better pursue your vision and mission through an iterative approach that includes implementing an impact strategy, analyzing achieved impacts, making improvements, and reporting. That’s why it’s crucial to anchor impact orientation at various organizational levels. More on this in lessons 2 and 3.
Impact investors are individuals or investment funds that aim to generate not only financial returns but also measurable, beneficial social or environmental impact. This dual focus sets them apart from traditional investors who prioritize financial performance without necessarily considering the broader societal or environmental impact.
The impact investment market, once a modest niche, has become dynamic and significant. For example, the volume of self-declared impact assets in Germany alone amounted to around 40 billion Euro in 2022 (Source: Impact Investing in Germany / Bundesinitiative Impact Investing). That indicates, the impact investing market is a substantial source of funding you should not overlook!
As you can imagine, it is very complex to assess social or ecological impact, much moreso than to assess profitability or turnover. Yet, many investors and increasingly also donors and public sponsors make impact measurement a condition for their funding. Impact investors utilize impact KPIs (Key Performance Indicators) and impact measurement frameworks to evaluate the effectiveness and scale of the positive outcomes achieved. This process can be seen as a means of communication and trust-building: What are the specific goals that you aim to achieve and how do you plan to provide evidence for them?
Measuring impact can be challenging, leading many enterprises to shy away from it. For example, only 39 percent of German green startups can substantiate their sustainability impact with concrete facts and figures (Source: Green Startup Monitor 2024 / German Startup Association). Consequently, those green and social startups that can demonstrate their impact possess a distinct advantage when engaging with investors, donors, customers, and other stakeholders.
Impact orientation not only enhances your ability to pursue your startup’s vision and mission effectively but also serves as a compelling way to demonstrate your commitment to stakeholders.
Our Case Study: The Tomorrow University
Discover our case example, Tomorrow University, whose impact framework has significantly contributed to its success.
See what Thomas Funke, Co-Founder of the Tomorrow University, has to say about the advantages of impact orientation for his social business:
”Impact funds only invest in companies that have an impact. Our investors explicitly ask for impact metrics.”
How Impact Orientation can Benefit your Startup
By adopting an impact framework you and your team demonstrate not only motivation but also showcase the ability to contribute to positive change. Click on the “plus” signs to further explore the benefits of impact-oriented work!