Cindy Gallop, CEO and founder of sextech startup MakeLoveNotPorn


August 22, 2023

Europe needs startups to solve big problems — who will back them?

Europe needs startups to solve problems that really matter – who will back them? Sifted asked several speakers ahead of Sifted Summit in October

Sophie Rowe

4 min read

Some VCs have a sharper eye on hype cycles over due diligence.

But to compete with Silicon Valley, Europe needs startups with higher aspirations than “making things slightly more convenient”, says Johannes Lenhard, a researcher at the University of Cambridge and co-director of VentureESG, a community driving the adoption of ESG in venture capital.

Change is happening slowly — Atomico reported a 3% increase in investment in European ‘purpose-driven tech’ from H1 last year — but funding can be hard to come by. 

While venture is one financing option, CJ Tayeh, founder of social enterprise fintech Flank, says it’s built for scale, not depth, and isn’t the best route if you’re building a social enterprise or are keen to grow organically.


How can startups secure financial backing without mission and core values taking a backseat? These are some of the options. 

This article was inspired by the event theme of Sifted Summit: new rules. We’ll explore how to navigate the funding landscape, discuss alternative business models and share strategies for scaling without compromising mission and core values. Catch everyone interviewed for this piece at the summit.

1/ Find funding at a family office 

Family offices are undergoing a generational shift as younger family members take the reins. “Gen Z and millennials want to invest in things that will have beneficial social impact,” says Cindy Gallop, CEO and founder of sextech startup MakeLoveNotPorn. 

Gen Z and millennials want to invest in things that will have beneficial social impact

Gallop says vice clauses and layers of LP and GP decision-making have so far blocked her startup from raising VC capital, even when investors saw the market opportunity. But family offices are more autonomous: “They can absolutely deploy their funds any way they want.” 

Family offices backed 541 European startups across 2021-2022, almost twice as many as the previous two-year period. Attracting these investors is a case of “making synaptic connections happen,” says Gallop. Her strategy: building a personal brand on LinkedIn, carrying out media interviews and being active in the family office conference circuit. 

2/ Seek out first-principled investors 

Bringing onboard investors who reach quick decisions and operate with conviction is non-negotiable for Basecamp Research, a biodiversity startup which raised a $20m Series A last year.

Cofounder Glen Gowers says he sought out ‘first-principled investors’ who had a solid understanding of the business, including the shortcomings. ”One of our first investors listed every failure point we could possibly hit… the next sentence out of his mouth was therefore we understand what you're doing and we want to invest.”

VCs who lack conviction may aim to implement a business model they’ve seen play out well in the past — rather than letting founders take a bet. 

“We see a lot of companies who start with a new business model, then investors push them towards a more traditional business model,” says Gowers. “If our investors changed their conviction based on short-term trends, we’d be in for a bumpy ride over the next 10 years.”

If our investors changed their conviction based on short term trends, we’d be in for a bumpy ride over the next 10 years

3/ Embed ‘golden shares’ into your startup 

Introducing a ‘golden share’ mechanism — which ensures that assets are committed to a purpose and can’t be privatised — can keep missions intact when startups secure funding. 


Golden shareholders are more focused on an ethical or social strategy rather than profits. “They protect the structure of why your company does what it does and its impact on the world,” says Tayeh. 

Startups with golden shares include Dutch chocolate brand Tony’s Chocolonely, craft beer brewer Toast Ale and social enterprise fintech Library of Things — all have raised VC or angel capital

4/ Look at alternative funding 

State funded grants, such as Innovative UK, offer non-dilutive funding and access to technical expertise for healthtech and deeptech startups — sectors for which it can be difficult to secure venture backing. 

“A lot of hardware takes longer to materialise and falls outside of the typical fund lifecycle model,” says Lenhard. 

Another alternative is debt. Henrik Landgren, a former partner at EQT Ventures co-founded debt financing startup ArK Kapital to provide an alternative for “founders building great things who didn’t fit the VC mandate” — including startups targeting niche markets and geographies.

Cooperatives, such as Zebras Unite and Impact Shakers, aren’t focused on unicorn-hunting and ‘growth at all costs’. Instead, everyone in the co-op pays membership fees, which go towards supporting new companies — co-op members receive a share in the returns. “We want to make sure that as few companies as possible fail and that we have medium returns,” says Yonca Braeckman, CEO and cofounder of Impact Shakers. 

Startups can fuse together multiple funding mechanisms. “Some startups use us to fund the profitable part of their business and combine that with VC to be able to take more risk and grow even faster,” says Landgren. 

Want to join the conversation? Zebras Unite and VentureESG are hosting meetups at the Sifted Summit in October. Share your take on the future of startups and tech for good in fishbowl forums and build community with fellow purpose-driven founders, investors and academics. You can get your ticket for the event on October 4-5 here.

Sophie Rowe

Sophie Rowe is an events producer at Sifted, working on our in-person Sessions and flagship Summit. Connect with her on LinkedIn