Rethinking Risk: Why Impact Startups Are More Resilient Than You Think
Why Long-term Thinking and Systemic Approaches Minimize Risk in Impact Startups
What if we’re defining risk incorrectly? In the venture world, a concept of risk still dominates that is based on short-term volatility, probability of returns, and scalable business models — measured by metrics such as Burn Rate, Runway, Total Addressable Market (TAM), or Customer Acquisition Costs (CAC). These indicators may be relevant for traditional digital business models but fall short for impact startups. This is because they operate not despite complex challenges but because of them: climate change, resource scarcity, social instability. Their innovative power lies precisely in not avoiding systemic risks — but in addressing them entrepreneurially.
Financial models are often based on linear progress thinking — which, however, is increasingly losing validity in the context of ecological tipping points, geopolitical shocks, or regulatory changes. In contrast, impact startups work with an expanded understanding of risk: they consider not only financial risks but also planetary and societal risks — and directly derive strategic fields of action from these.
The EU Taxonomy [1], the Climate Disclosure Rule [2] of the US Securities and Exchange Commission (SEC), or the originally ambitious Corporate Sustainability Reporting Standard (CSRD) of the EU show: impact is moving into regulatory focus. Both the Omnibus decision [3] of the EU Commission and the political countermovement in the US (including lawsuits and ESG backlash) [4] show that the regulatory reality is fragmented — and thus not a reliable driver. Nevertheless, the pressure on companies to demonstrate responsibility is growing — not through laws, but through investors, partners, and customers. Those who systematically ignore impact today take a strategic risk: the loss of trust in an increasingly value-oriented market.
For strategic partners — companies with venture arms, family offices, public funding agencies, or venture capitalists with long-term thinking — a decisive lever emerges here: impact startups are not “philanthropy with a tech frontend,” but early indicators of upcoming market shifts. Those who invest in these founders today are investing in problem-solving competence and future relevance.
McKinsey [5] shows that companies with high Environmental, Social, and Governance (ESG) maturity exhibit lower volatility, more stable cash flows, and better long-term performance. These patterns apply analogously to impact startups, which are aligned with impact, resilience, and governance from the beginning.
Our thesis: Impact startups are not high-risk experiments but better risk managers. They think in systems, not quarters. They ask: What happens if we do nothing? — and build business models that consider resilience not as an emergency response but as a core competency. This is precisely why they are the more valuable allies for strategic partners.
Rethinking Risk — From Output to Context
Growth is the mantra of many venture capital financings — measured in CACs, Monthly Recurring Revenues (MRRs), and hockey sticks. Yet what appears as entrepreneurial success in the short term can be a risky illusion in the long term. Traditional investment logics rely on output KPIs — customer growth, revenues, scaling — while often systematically ignoring the true contextual risks.
This output-centered logic fails to recognize structural risks such as:
- Externalized costs: Companies that cause social or ecological damage — for example, through exploitation of resources, questionable supply chains, or poor working conditions — generate systemic follow-up costs that eventually strike back. Whether through regulations, loss of reputation, or activist consumers.
- Underestimated regulations: Regulatory requirements such as the EU Taxonomy or the Climate Disclosure Rule of the US SEC may waver in political debate, but the trend is clear: sustainability and impact transparency are becoming minimum standards. Companies that ignore these developments risk, in the worst case, their financing or market approval.
- Fragile markets: Startups that rely on existing but crumbling systems — such as fossil infrastructure, overburdened supply chains, or cheap production at the expense of people and the environment — are building on sand. The risk lies not only in the business model but in the entire market environment.
Especially in early stages, many VCs rely on well-known templates — Total Addressable Market, 10x Returns, quick exits. But it is precisely this logic that contributes to many startups building on a foundation of short-term opportunity rather than long-term resilience.
Those who analyze risks only in terms of Burn Rates and Runways miss the strategically more important question: How dependent is the business model on conditions that are currently changing dramatically — ecologically, socially, politically?
Impact startups that understand and address systemic relationships build on more stable foundations. They anticipate trends such as ESG transparency, resource scarcity, or societal value changes — and turn them into strategic advantages. Not despite, but precisely because of their long-term perspective, they are able to react faster, learn deeper, and grow more robustly. Those who rethink risk today don’t have to sacrifice returns — just blind spots.
Systemic Intelligence: How Impact Startups Recognize Risks Before They Escalate
Impact startups are not idealists; they are sensors. Those who found with a systemic mindset don’t just ask: “How do we grow?” but: “What are we actually growing on?” This attitude is more than moral — it’s strategic. Many social, ecological, and economic challenges develop gradually before they tip. Impact startups that work with such dynamics often recognize these signals earlier — and build business models from them before others even notice the risk.
Early warning system instead of reputation brake: Companies that include social inequality, resource scarcity, or regulatory pressure in their analysis not only better anticipate risks — they identify new opportunities. They ask which structural problems are currently intensifying, which systems are under stress — and what entrepreneurial solutions might look like that address not just symptoms but causes. Whether supply chain stability, climate adaptation, or digital participation: those who think in broader contexts make more forward-looking decisions.
Holistic = business-relevant: Research confirms that companies with high ESG scores show lower volatility and a better risk profile in the long term [6]. But beyond these metrics, it’s also evident: founders who start with impact often develop more robust hypotheses about societal developments — and can therefore iterate faster and more precisely. Impact startups are not less economic. They just have a broader radar.
Climate risks have long been financial risks — and investors know it. Munich Re, one of the world’s largest reinsurers, has been warning for years that extreme weather events are increasingly causing economic and business damages — and that the climate crisis poses systemic risks to financial market stability [7]. For investors, this means: climate resilience is not a soft factor but a central risk criterion. Companies that do not consider environmental and social factors lose attractiveness — regardless of whether they explicitly position themselves as impact startups. Founders who actively integrate ecological and social risks — whether through sustainable supply chains, diversity, or transparent governance — deliver not only a better narrative but also robust arguments for capital acquisition.
Quarterly Thinking is Yesterday’s News
Impact startups working along societal transitions such as decarbonization, circular economy, or food system change rarely think in quarters. Their entrepreneurial horizon often spans 5, 10, or even 20 years — because they develop solutions for systemic challenges that cannot be resolved within an annual cycle. This long-term orientation forces them to build more robust business models: resilient to political uncertainty, technological disruptions, and changing market conditions.
Startups like Made of Air — a Berlin-based company that develops CO₂-negative materials from biomass for the construction and automotive industries — must not only demonstrate technological scalability but also consider political developments in building regulations, the price development of carbon credits, and long-term material availability. This thinking in interlocking, changing systems is not an idealistic exercise — but a strategic advantage.
Systemic thinking means looking beyond direct outputs and recognizing the connections between different actors, sectors, and impact levels. Impact startups that anchor this thinking in their corporate strategy anticipate risks earlier — for example, through interactions between climate, migration, supply chains, and political stability. They thereby build more flexible, adaptive organizations.
As the MIT Sloan Management Review article [10] describes, the focus of systemic investors is increasingly on precisely these capabilities: companies that not only address societal systems but actively shape them — for example, through open data ecosystems, regenerative supply chains, or smart governance structures. Impact is no longer understood merely as an end goal, but as a complexity competence: the ability to make decisions under uncertainty without losing sight of the bigger picture.
A good example is Climeworks, a startup in the carbon removal sector. Instead of speculating on short-term CO₂ prices, the company relies on scientific partnerships, long-term contracts with corporations like Microsoft [9], and public funding to create a stable foundation for scaling.
Startups that think in transformation logics escape the timing of short-term markets. Instead, they build robust business models that, in times of increasing uncertainty, do not focus on efficiency optimization but on adaptability.
Culture Beats Crisis: Why Values Are More Than a Poster on the Wall
When markets falter, supply chains break, and expectations shift, it becomes evident what truly holds a team together. Studies show that companies with a clear, lived value-based culture not only navigate more stably through crises but can also react faster. A study by LRN [11] shows: Organizations with ethically led cultures are 6 times more likely to be better at adapting to changes, 5 times more innovative, and 3 times more profitable than those with purely operational orientations.
The reason: In value-based teams, it’s easier to make coherent decisions even under pressure — because shared principles provide orientation where KPIs don’t yet offer an answer. Especially in startups, where pace is high and resources are scarce, a lived culture becomes the invisible infrastructure upon which strategic capability to act is built.
Values must be operationalizable, otherwise they remain well-intended declarations of intent. Successful impact startups translate their culture into resilient structures — for example, through:
- Stakeholder inclusion in governance mechanisms: such as advisory boards, multi-stakeholder models [13], or transparent decision-making processes.
- Impact metrics as leadership variables: Companies like Too Good To Go or Share integrate CO₂, water, or social indicators into OKRs and management incentives.
- Agile decision principles that rely on trust and context instead of rigid hierarchies — for example, through decentralized responsibility, participatory tools such as consent procedures, or collective target agreements.
These principles not only increase decision speed but also strategic coherence in the team — because they create a shared foundation for how to respond to unpredictable situations.
In the startup world, talent retention is one of the biggest risks. According to Deloitte Global Human Capital Trends 2023 [12], over 70% of employees want their work to make a positive contribution to society. Companies with a clear mission that translate this into operational guidelines report not only higher motivation but also lower turnover and stronger intrapreneurship. Especially in phases of high uncertainty, it becomes evident: Those who know what they’re working for remain capable of action — even when everything else changes.
Impact is Not a Risk — It Recognizes Risk Earlier
The classic logic in venture capital and startup development often treats impact as a special case — an add-on that brings additional complexity but no measurable benefit. Yet this view is not only outdated but economically risky. Many of the “unexpected” costs and crises that later hit startups — from loss of reputation to regulatory adjustments to supply chain problems — could be recognized early if companies did not ignore social and ecological impacts but systematically analyzed them.
Impact acts like an early warning system: Those who deliberately focus on the systemic side effects of their innovation recognize blind spots — long before they become financial or operational risks.
Modern impact due diligence goes far beyond classic ESG screenings. It analyzes which systemic risks a business model creates or mitigates, how strongly it depends on political, ecological, or social framework conditions — and where interactions are overlooked.
Tools like our Regenerative Business Model Canvas [14] help founders recognize which social, ecological, or governance factors actually represent material risks — from the perspective of different stakeholders. The systemic view is particularly effective: Instead of just evaluating sector-internal risks, it asks how a company intervenes in a larger ecological or social structure. This perspective changes not only product development but also capital allocation, partner selection, and growth strategy.
Another instrument is ex-ante system risk analysis, as required in the context of the EU Green Deal or TCFD standards. It considers not only financial but also ecological limits and tipping points — a paradigm shift in risk management that investors are increasingly adopting, for example through scenario-based stress testing of business models under climate change or biodiversity risks.
Companies that incorporate ecological and social risks early into their strategic decisions can avoid significant later costs. This affects not only regulatory adjustments but also operational disruptions and reputational losses.
A Harvard Business School study shows: Companies with strong ESG integration recorded higher risk-adjusted returns over 18 years, lower capital procurement costs, and more stable performance in times of crisis [15]. Although the study does not specifically focus on startups, it suggests that sustainability orientation is not a burden but a strategic advantage — especially for growth-oriented companies.
The systematic inclusion of climate risks is no longer optional — it is becoming the standard of good corporate governance. The report “Managing Climate Risk in the U.S. Financial System,” published by the Subcommittee of the U.S. Commodity Futures Trading Commission (CFTC) and addressed by KPMG among others, comes to a clear conclusion: Climate risks are financial risks — and must be managed just as professionally as other systemic threats [16].
For startups, this means: Those who integrate ecological risks early in due diligence, product development, and strategy not only create a better starting position for future financing rounds — but also increase their own resilience to regulatory, operational, and reputation-related risks. Not impact despite risk — but impact as risk management. For investors, this offers two advantages: First, the reliability of the business model increases because it is more robust against systemic disruptions. Second, a strategic narrative emerges that shows, beyond pitch metrics, how a startup deals with uncertainty and change — while leaving positive traces.
Impact is the New Risk Filter for Partnerships
In an economy where supply chains are fragile, markets unstable, and reputational risks omnipresent, more and more companies and investors are paying attention not only to innovative power but to resilience capability and systemic integrity of their partners. Impact startups that operationalize responsibility early and anticipate regulatory developments are sought-after cooperation partners. Not because they are more ethical — but because they are more reliable.
Especially for large companies, partnerships with impact startups offer the opportunity to credibly fulfill their own sustainability goals — while simultaneously gaining access to new technologies and business models. The French corporation Danone, for example, deliberately entered into partnerships with impact ventures like Phenix (https://phenix.org), which specializes in food rescue. Phenix contributed not only technological solutions but also regulatory know-how and social trust.
Government and European funding instruments like the programs of the European Innovation Council (EIC) [17] or Horizon Europe are increasingly prioritizing startups that combine systemic impact with economic scalability. Here, impact determines not only funding amounts but also project worthiness. Applicants who bring robust governance structures, credible impact metrics, and regulatory connectivity have measurably better chances.
Brands like Patagonia or The Body Shop have shown how deeply cultural and strategic values affect partnerships. In a time when greenwashing is increasingly prosecuted and media ecosystems uncover reputation-damaging behavior ever more quickly, investors and corporates pay increased attention to value compatibility. Impact startups that implement stakeholder governance, clear OKRs, and ethical product standards in their early phase offer strategic security here.
Strategic alliances, investments, and funding increasingly flow into startups that not only develop solutions but demonstrably act responsibly. Impact becomes a double lever: as a growth accelerator and as a risk reducer. For investors and partners, therefore: Those who underestimate impact miss not only moral opportunities — but lose access to the most resilient players of the future.
Rethinking Risk: Time for a Better Concept of Risk
In large parts of the startup and investment ecosystem, the notion still dominates that impact is a risk: too expensive, too slow, too complex. But this view is too narrow — and is increasingly becoming a strategic misjudgment. Because those who integrate impact into their business and investment models reduce long-term risks where classic KPIs remain blind: in supply chains, regulations, reputation, social acceptance, and ecological resilience.
Impact-oriented companies think in connections rather than quarters. They identify systemic tipping points early, anticipate societal shifts, and avoid expensive path dependencies. According to an analysis by McKinsey, investors increasingly recognize that ESG and impact criteria are not only ethical but also economically relevant early indicators of resilience [18].
MSCI also emphasizes in the current “Sustainability and Climate Trends to Watch 2025” that impact-oriented companies exhibit a more robust risk profile — particularly with regard to climate consequences, resource availability, and social acceptance [19].
For investors, corporations, funders, and political actors, this means: Risk management doesn’t begin with control — but with design. Those who only consider the risk “of the new” are ignoring the risk of “carrying on as before.” The future viability of business models is no longer measured solely by their scalability, but by their system compatibility.
Specifically, this means:
- Rethinking cooperation strategies: Which partners are not only fast but stable?
- Re-evaluating investment decisions: Which models truly reduce follow-up costs?
- Using funding more intelligently: Which teams not only recognize risks but actively design solutions?
Impact startups are not risk-free per se. But they are often better prepared for the risks of the future. They operate with clear stakeholder structures, use systemic thinking as an early warning system, and develop products and business models that are not just more efficient — but more robust. Those who invest in impact today are not investing in idealism — but in more stable business models, better partnerships, and more resilient innovations.
Sources:
[1] https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en
[2] https://www.sec.gov/news/press-release/2022-46
[3] https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
[4] https://www.sec.gov/newsroom/press-releases/2024-31
[5] https://www.mckinsey.com/capabilities/sustainability/our-insights/does-esg-really-matter-and-why
[6] https://www.msci.com/www/research-report/esg-and-performance/01726513589
[7] https://www.munichre.com/rmp/en/products/location-risk-intelligence/climate-change-edition.html
[8] https://www.munichre.com/en/risks/climate-change.html#:~:text=Individual%20loss%20events%20cannot%20be,in%20some%20cases%2C%20even%20more.
[9] https://climeworks.com/press-release/climeworks-extends-collaboration-with-microsoft
[10] https://mitsloan.mit.edu/ideas-made-to-matter/what-systemic-investing-and-why-are-impact-investors-taking-notice
[11] https://pages.lrn.com/hubfs/MoralLeadership_Final.pdf
[12] https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2023.html
[13] https://www.forbes.com/councils/forbesbusinesscouncil/2023/11/21/the-stakeholder-economy-is-here-how-businesses-can-adapt/
[14] https://www.cosmic.gold/resources
[15] https://www.hbs.edu/ris/Publication%20Files/SSRN-id1964011_6791edac-7daa-4603-a220-4a0c6c7a3f7a.pdf
[16] https://assets.kpmg.com/content/dam/kpmg/cn/pdf/en/2020/12/managing-climate-risk-cftc-subcommittee-report.pdf
[17] https://eic.ec.europa.eu/news/eic-impact-report-2025-eic-track-leading-deep-tech-investor-mobilising-eu26-billion-additional-2025-04-03_en
[18] https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/why-esg-is-here-to-stay
[19] https://www.msci.com/research-and-insights/2025-sustainability-climate-trends-to-watch
