Boosting sustainability startups in Asia

When Mark Inkster started out in business in the early 1990s, sustainability was still a relatively fringe concept. “There were pockets where it was mainstream,” he says, pointing to hotspots like America’s West Coast, but otherwise it “wasn’t actively being considered”. Inkster himself was a fan of the idea – he was part of a “salon on sustainability” in San Francisco at the time – but it was not central to his professional life. It was not until about five years ago, after a career spearheading tech and digital transformations across seven different industries, including launching an electric scooter company in Asia, that he decided: “now is the time”.

Over the past three decades, Inkster had seen the idea of sustainability in business grow exponentially as public awareness of climate change and pollution broadened. He had also seen the whole “ecosystem of innovation” change, too. “Thirty years ago was the beginning of the dot-com era and it was relatively rare to find angel investors outside of Silicon Valley,” he says. “There were very few in Europe and almost none in Asia.” Drawing on these insights, Inkster reached out to two friends – one a former banker, the other an executive at the IFC (International Finance Corporation) – with a view to creating a group focused on boosting innovative startups in Asia. 

Asia Sustainability Angels was launched in 2021. Today, the investment club has grown to over 50 members. Every month, it showcases three companies with potential for investment to the group. Since launch, it has resulted in 15 deals being made with a broad range of startups, with investments averaging between $50,000 and $200,000 to companies that tend to be looking to raise about $1-3 million. “We do small, early stage investments,” Inkster explains. “There’s also a desire among our members to actually help these startups through their connections, their knowledge, and their skills.”

Among the startups to attract attention from Asia Sustainability Angels is Full Circle Biotechnology, a nutrient recapture company based in Thailand. It uses a combination of black soldier flies and smart bio-chemistry to treat waste and turn it into protein to be used for animal feed. Another, Okra Solar, is focused on the electrification of remote villages, using an internet of things (IoT) device to enable the creation of micro-grids that could be as small as three huts, reducing the need for wood or kerosene to power generators. It began in Asia and is now expanding into Africa and the Caribbean.

For Inkster, investing in startups with a sustainable mission makes good business sense because the “need to innovate is strong”, albeit the risk is higher than investing in listed markets. Pressure from governments eager to meet their climate goals is also driving this. Corporate ESG (environmental, social and governance) drives make a difference, too, but from Inkster’s experience new developments and industries have been driven by startups. “I’m looking at the companies that are going to develop the technologies necessary for us to have the environmental transition that we need.”

Assessing and defining sustainability credentials, especially if you measure indirect Scope 3 impacts, is a complicated process. Inkster admits that for startups in particular the degree of precision is less than with more established companies. He compares it to financial forecasting. “We have to make some judgement of whether we think this company is going to get from a hundred thousand in revenue to tens of millions. The same is true on the environmental side.”

While it may not always be possible to establish the precise C02 reduction, a logical approach can help steer investors. For example, rice cultivation emits significant methane. Asia Sustainability Angels has invested in Husk, a company that does carbon sequestration by converting rice husks into biochar, which is mixed into fertiliser and sold to farmers in Cambodia. When farmers use the fertilizer, carbon is sequestered in the soil, and the biochar promotes soil health. The startup was able to get certification for its carbon credits. “So, in that case, we rely on the third party certification company who’s gone in to look at their business model and said, ‘OK, yes, these people have indeed come up with a way to remove carbon and, in fact, it’s good enough to take to the markets’,” he says.

The group is “actively developing” its long-term vision. “What we’ve clearly identified is the desire to invest in these early stage companies from a growing number of people, and for members to help through their knowledge, connections and skills.” This stands out from wider trends; Inkster has observed that early stage investing in many new technologies have diminished in recent years, as investors have shifted to lower risk categories. “But climate tech has not suffered the same decline,” he says. “More and more people are aware of the massive need – and the massive investment opportunity – to find the solutions that are going to take our economy forward in some fundamental ways.”