How startups drive economic recovery while growing responsibly

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Jeremy Jurgens, Managing Director, World Economic Forum

• Startups are crucial in bringing about societal change as well as driving economic recovery and responsible growth.
• Ahead of Davos 2022, we asked the CEOs of Global Innovators and Technology Pioneers on how they are helping to drive economic recovery and reach new levels of growth in a sustainable and responsible way.
• A number of Technology Pioneers and Global Innovator Unicorns will join the Annual Meeting to bring their perspective to the biggest global challenges.

Startups are a catalyst for economic growth both globally and locally. The value that startups create is nearly on par with the GDP of a G7 economy and the amount of startup funding in 2021 surpassed $600 billion, shattering funding records. The number of unicorns is well past the 1,000 mark and growing exponentially.

While growth for startups is core to their survival, it is equally important for them to develop responsibly. We asked the CEOs of Global Innovators and Technology Pioneers, the Forum’s communities of high growth innovative startups, for their views on how they are helping to drive economic recovery while scaling up sustainably and responsibly.

‘An impact-based business model and a committed mindset’

Michelle Longmire, Co-Founder and Chief Executive Officer, Medable

Startups and scale-ups are only successful if they address an unmet need. For us, that need is patient access to clinical trials and effective medications. An impact-oriented mission—in our case, a patient-centric mission—is what makes a company sustainable and responsible.

Our success doesn’t just increase our market share; it improves people’s health and creates hope for countless communities. Our values are what give our company its value. Our decentralized platform creates a win-win: Patients gain access to clinical trials for medications they need and biopharmaceutical companies get access to a streamlined development process that helps them make better medicines while saving costs.

Apart from driving economic recovery, startups and scale-ups also need to drive the mindset shifts required for adoption of their technologies and ideas. Everything Medable does—from how we go to market to how we partner with other companies—is informed by the mindset we want the industry to adopt alongside us.

Once a company has those two pieces—an impact-based business model and a committed mindset—it is ready to scale responsibly and sustainably.

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‘Making a lasting change’

Tom Plummer, Founder and Chief Executive Officer, Wingcopter

The drone industry is at a point where the auto industry was from about 100 years ago – and it is growing rapidly. The application of logistics by drones alone is growing at a CAGR of 53.8% to US$ 39 billion by 2030. On the one hand, with Wingcopter, we have established a globally unique mass production facility that can produce thousands of delivery drones per year, and in addition to the innovative combination of automotive manufacturing and aviation technology, we have not only developed new production processes but also been able to hire many people. But not only the production of drones – and we will build millions of them in the future – but also the operation creates jobs.

Together with Unicef, we have launched an education program and are training young people on the African continent, who are now finding new jobs in an economic sector to which they would never have had access before. Through fair wages, we not only create hope and jobs for this generation, but also enable these young people to later finance a good education for their children. In this way, we close an important cycle and make a lasting change.

‘Remember your purpose’

Essa Al Saleh, Chief Executive Officer, Volta Trucks

It can sometimes be difficult to marry economic growth and sustainability in a startup and when moving to being a scale up. The key is to remember the motivations and reasoning as to why the journey was embarked upon in the first place and make responsible business a cornerstone of the values and ethos from the beginning.

In the case of Volta Trucks the very purpose of our being is to make cities safer, cleaner and more sustainable for the people that live and work within them. Our Founders realised that the solution in achieving this was the opportunity presented by designing a purpose built, fully electric, truck in the medium duty category for use in urban logistics.

As we are scaling up, our founders, CEO and senior team reinforce these motivations and that these need to continue throughout our journey. That is why, we are embedding sustainability into every element of the business, from designs that include sustainable materials to procurement process and suppliers that are ethical in sharing our values. The key is to ensure that in every decision sustainability has been included and considered as part of the decision-making process, rather than as an afterthought.

‘Embed sustainability into your business model’

Val Miftakhov, Founder and Chief Executive Officer, ZeroAvia

It is perhaps easy for us given the nature of the challenge we have pursued, but the real key is to embed sustainability into your business model. Increasingly with the energy transition there are areas of profound economic opportunity that are inherently related to reducing emissions and improving environmental impact of traditional industries and processes.

Furthermore, investors in startups and scale-ups are increasingly looking at the ESG components of the proposition intently. Buyers, from governments to large corporates to consumers, now want to make purchasing decisions based upon the full environmental and societal impact of any given firm. So, to survive and thrive, you have to ensure your growth is sustainable and responsible. It is becoming a self-fulfilling prophecy.

‘An engine of change’

Eynat Guez, Cofounder and Chief Executive Officer, Papaya Global

Technology startups are more than catalysts for growth. They are the engine of growth itself. They solve problems no other sector is addressing with innovative thinking, thus pushing society forward – all while creating jobs, stimulating the economy, and attracting foreign investment.

The tech industry is the most ambitious and creative sector in business today, and it has the strongest commitment to core values. It’s doing a great job driving economic recovery while holding tech companies accountable for their social and environmental impact. Today, investors, top talent, and potential partners refuse to work with companies unless they show they are hiring fairly, paying equitably, and displaying social and environmental responsibility.

It’s essential to me that Papaya Global contributes to this emerging new standard. Global payroll contains the data companies need to uphold their values in equality and social justice, and our technology turns that information into fair business practices.

Technology is not just about growth. It’s the engine of change, and I’m proud to say, it’s forcing accountability for making sound business decisions.

‘Create a strong culture’

Julie Gerdeman, Chief Executive Officer, Everstream

When you’re smaller and agile, you can quickly change how you do things to stay aligned with your goals and values. New and better ways of operating sustainably and more responsibly come out every day, which means you have to be prepared to change your approach regularly. It’s simply part of the startup culture to move quickly.

Companies like Everstream attract employees, partners, and clients with shared or similar values. When recruiting or exploring partnerships, we establish up front that we are bold with our innovations. We operate sustainably, and we always do what’s right, the right way, even when it’s difficult. We seek out employees and partners who are also committed to these values, which creates a strong culture. That level of passion is contagious, and it feeds itself. When people walk the walk and generate new ideas and behaviors for building technology and a company culture that they care about, the sky is the limit.

‘Ingrain sustainability into the company’s core DNA’

Sean Hinton, Founder and Chief Executive Officer, SkyHive

Startups and scale-ups can reach new levels of growth in a responsible way by injecting sustainability into the company’s core DNA and mission early on. SkyHive is an example of a mission-driven startup driving economic recovery and sustainability through technological innovation. With the amount of knowledge we have today, there is no excuse for leaving sustainability out of the equation, especially in an early-stage company where quick and effective change is more easily attainable.

‘Generating social, financial and industrial value for all’

Stefano Buono, Founder and Chief Executive Officer, newcleo

Startups are by definition an agent of change – they are creating something new or reinventing it. They are engines of innovation, starting projects from scratch, and generating value and opportunity.

About two years ago, I embarked on a new project and helped set up a new operating Venture Capital, called LIFTT. It aims to invest in startups, encouraging development and technology transfer from university to industry and to clear the way from new business idea through to innovative product creation.

LIFTT supports the creation of businesses, job creation and economic growth; they take an ethical and transparent governance model inspired by the ESG approach. All this can improve people’s life and create a positive impact on our society: two keys to a more sustainable future.

We give high visibility to ideas and new businesses. This is a powerful way to generate social, financial and industrial value for all stakeholders.

‘Sustainability holds a competitive edge’

Aba Schubert, Chief Executive Officer, Dorae

Most startups and scale-ups are in a race. It’s a race against the competition, or a race against a window of opportunity, or against cash burn, and so on. Sustainable and responsible practices must help them win that race or they won’t be a priority.

Sustainable and responsible practices can be supported through culture and partnerships and rewarded through incentives to boost economic recovery.

We already see certain consumer-facing businesses shaping their products and operations to reflect the desires of their target customers around sustainability, and in some labour markets, demonstrating a responsible corporate culture can be a competitive edge.

On a broader level, public-private partnerships can be shaped to lower the costs of sustainable and responsible practices to startups and scale-ups by making specialised expertise available and fostering growth in partner businesses.

Finally, qualitative and quantitative incentives can serve as waypoints to shape behaviours and decisions in rapidly growing businesses – particularly in regulated sectors. These must be crafted with care to avoid unintended consequences and potential exploitation. But they can have the most impact on winning the race.

‘Startups drive economic recovery while building the future’

Ariel Katz, Chief Executive Officer and Co-Founder, H1

Startups don’t just create jobs from that company but the most successful startups give hope, create community, and build the future. I’d put more weight on those 3 than the literal jobs that a startup creates. In this new world post-covid start ups don’t need to be based in San Francisco anymore and I think you will find wildly successful companies in new cities that will create this hope, community, and eco-system around it that will build the future.