Impact investments are evolving: New opportunities in civic tech, media, and democracy.
Are you wondering where the next big investment opportunities lie? In addition to climate and social innovations, technologies that promote democratic processes, strengthen fact-based media, and enable citizen participation are now coming into focus. Why?
Investments in civic tech, media, and democracy can not only solve societal problems but also generate long-term returns. Projects like “Neue Amt Altona” in Hamburg demonstrate how economic, social, and ecological goals can be combined, serving as a blueprint for integrated impact models.
Want to learn more about new models and opportunities? Let’s dive deeper!
Democratic societies worldwide face profound challenges that demand solutions. Since the rise of social media around 2010, there has been a global decline in democracies. According to Freedom House, 2023 marked the 17th consecutive year of declining global freedom, with only 20% of the world’s population living in “Free” countries. Three key issues stand out: In 2019, over 70 countries were affected by manipulation campaigns, 19% of all tweets during the 2016 US presidential election were generated by bots, and 64% of extremist group memberships were triggered by social platform algorithms (Brookings).
Social media systematically amplifies societal polarization. Each additional expression of moral outrage in a tweet increases its retweet rate by 17% (Nature Human Behaviour). As a result, seven out of ten Republicans and Democrats consider members of the opposing party to be “brainwashed” (Pew Research). Additionally, Americans often overestimate the differences in opinion with their political opponents—by up to 50% (Ipsos).
Another problem is declining civic participation. According to a 2021 OECD survey, only 30% of respondents felt they had influence over political decisions, and just 41% felt capable of participating in decisions in their local community. Added to this, economic uncertainties and inequalities threaten the stability of democratic systems. Despite these difficulties, new opportunities are emerging, which are explored below.
Civic tech leverages digital technologies to strengthen civic engagement and improve government services. These technologies can bridge the gap between citizens and governments—through online services, open data platforms, digital voting tools, or citizen participation platforms. For example, platforms like Participatory Budgeting Project have enabled millions to directly influence public spending decisions.
An interesting correlation: People who feel they have influence over political decisions show higher trust in government (OECD). This demonstrates the potential of civic tech solutions to rebuild trust in institutions by creating accessible channels for democratic participation.
The potential of civic tech is especially visible in Africa. In 2022, more than half the population was under 25 years old (UN Africa Renewal). With 46% mobile phone users (64% of them with smartphones) and 570 million regular internet users (Statista), numerous opportunities for digital democracy are emerging. Projects in Africa include crowdmapping (e.g., Ushahidi), early warning systems, citizen monitoring of politics, open government initiatives, and more.
Open government approaches help provide high-quality information and counter disinformation. Transparency and access to information are core principles for strengthening democracy and fostering trust in institutions. In the past 20 years, the number of freedom of information laws worldwide has increased by 75%, reflecting a global trend toward openness and accountability (RTI Rating).
The concept of Das Neue Amt Altona in Hamburg shows how innovative organizational forms can connect democratic participation and sustainable development. The project combines co-working, studio house, and neighborhood meeting point under one roof and operates as a cooperative. This structure ensures that only active members have voting rights, enabling genuine participation.
A gender-balanced board and an interdisciplinary team ensure that different perspectives flow into decision-making processes. Affordable space through collective ownership directly addresses economic uncertainties. At the same time, the public ground floor with offerings for the neighborhood and the House of Engagement for non-profit associations create spaces for social participation and strengthen civic engagement.
The ecological orientation of the project is also convincing: wooden construction, green facade, roof garden, low-tech approaches, photovoltaics, and air heat pumps show how civic tech projects can address multiple challenges simultaneously. The flexible architecture also enables long-term adaptation to changing needs. This example illustrates how thoughtful approaches can provide practical solutions to complex social problems.
To evaluate success in areas such as civic tech, media, and democracy promotion, different approaches are needed than with traditional business metrics. While traditional startups often rely on metrics like clicks, downloads, or revenue, here it's about more profound changes: civic participation, inclusive decision-making, and transparent governance are at the center.
A good example is provided by Code for America. They don't just measure the number of apps they develop, but also their long-term use by administrations. They have also developed metrics that evaluate the impacts on governments, communities, and the civic tech ecosystem as a whole. This approach shows how important it is to consider impact at different levels.
Another central point is whether these technologies strengthen trust in institutions and increase local civic participation. Here, it is crucial that technology developers are involved early in planning evaluation methods. Only this way can appropriate systems for data collection and assessment be built.
The CivX approach emphasizes the role of citizens as active shapers. It makes the influence of people on institutions measurable. As the CivX Metrics Toolkit explains:
A 'CivX' approach views people not simply as customers to be satisfied in the context of a single interaction or service, but as participants with power and agency over institutions that affect their daily lives and the lives of others in their communities.
For impact investors in Germany, ESG criteria (Environmental, Social, Governance) and regulatory requirements are becoming increasingly important. Governments play an important role by supporting civic tech initiatives with policy frameworks, financial support, and technical infrastructure.
An example of successful implementation is OpenBudgets. This initiative creates more transparency by publishing government budget data. Citizens can view and analyze budget allocations, leading to informed discussions about public spending.
For startups, this means they must focus on data openness, protect digital rights, and safeguard citizens' privacy. Governments can support them with grants, innovation funds, or public-private partnerships. At the same time, civil society organizations monitor the implementation of such initiatives and ensure that governments fulfill their obligations. Technology companies should also contribute through CSR initiatives (Corporate Social Responsibility) that align with civic tech goals.
In addition to measuring impact, it is important to comply with regulatory standards and promote close cooperation between different stakeholders. Rajiv Vinnakota from the Institute for Citizens & Scholars describes the challenge this way:
I see an enormous opportunity to collaborate across many traditional dividing lines, create efficiency, and mobilize resources to answer a question that seems to concern us all: How do we know if we are making progress as a democracy?
Stakeholders often have different expectations regarding the impact of projects. Evaluations don't always consider the invested capital or external framework conditions. Quantitative metrics can also miss the essential, while case studies are often influenced by subjective assessments. It is particularly difficult to prove clear causal relationships in social contexts.
Relevant evaluation areas include civic participation, quality of public services, government transparency, accountability, and social innovation. A central aspect is governments' ability to respond to citizen engagement.
There are many successful examples of stakeholder engagement. The New York City Grassroots Budgeting Project (GBP), for instance, enabled over 100,000 residents to participate in the budget planning process. This led to more equitable resource distribution, with disadvantaged communities particularly benefiting. Another example is StreetFix in the UK. Here, citizens can report local problems, making administrations more responsive and accountable.
The importance of targeted impact measurement is also shown in an analysis by the Knight Foundation. Between 2011 and 2013, the foundation invested $695 million in organizations that use technology to promote civic engagement. Nevertheless, most civic tech tools have fewer than 20,000 users, which illustrates how important it is to systematically evaluate the impact of such tools.
Civic tech, media, and democracy promotion increasingly rely on business models that secure long-term social value.
A particularly exciting approach is platform cooperatives. They enable democratic participation and create sustainable structures. An example is Das Neue Amt Altona, which guarantees affordable spaces and genuine participation through collective ownership.
In the civic tech sector, blended financing models have proven successful. NextRequest optimizes public information requests, increasing transparency and efficiency. Another example is ioby, a crowdfunding platform for hyperlocal citizen projects. It charges a flat fee of $35 for projects with a funding goal over $1,000.
The freemium-to-enterprise strategy is also gaining importance. This involves offering free tools for citizens while monetizing premium services for governments and businesses. SeeClickFix is an example: citizens can report problems to local authorities, while the platform finances itself through licensing fees from municipalities.
Parallel to new business models, creative financing strategies are also coming into focus.
Civic tech organizations often combine recurring revenue ("Buyer" revenue) with capital for growth and innovation ("Builder" capital). Diversified financing approaches offer stability, with more than 60 percent of non-profit organizations having revenue sources beyond grants. An example is DonorsChoose.org, where three-quarters of donors pay an optional 15 percent service fee. These funds cover overhead costs and promote educational initiatives.
Blended capital approaches combine grants, venture capital, philanthropic investments, and public-private partnerships. Goodr, a company for managing food surplus, was able to secure $2.5 million in grants and $3 million in mission-oriented VC funding. This financing helps achieve both social impact and generate revenue.
Consulting services also play an important role, as governments often rely on personal support.
The cooperative structure is experiencing a renaissance in Germany. It enables democratic decision-making, limits profit distribution, and promotes long-term stability – a model that is particularly attractive for impact investors.
Furthermore, alternative financing models such as equity crowdfunding, angel investing, and donor-advised funds strengthen the financial basis of sustainable projects. All these approaches contribute to making impact startups financially resilient.
The presented business models show how impact VCs invest strategically. Despite the general slowdown in the venture capital sector, impact startups remain financially stable. In 2024, almost 15 percent of global VC financing flowed into companies pursuing ESG and social impact values. Particularly in demand are areas such as ClimateTech, AI for educational equity, public health, and tools for accessibility, civic participation, and justice reforms.
An example is Recidiviz, a civic tech startup from San Francisco that received over $20 million in philanthropic funding and innovation grants in 2025. The company helps criminal justice agencies reduce incarceration using data analytics.
According to a survey, 84 percent of experts expect significant social and civic innovations by 2030, while 69 percent believe that targeted use of technology will help address central challenges.
Direct quotes illustrate this trend:
"The most exciting startups of 2025 don't just pitch profits, but they pitch purpose." – Laine Bradley, Consultant and Speaker.
Another example is TômTex, a Brooklyn company that produces sustainable leather from shrimp shells and fungi. In 2025, it received government R&D grants as well as $1.7 million in CleanTech VC investments.
Ethan Zuckerman, Director of the MIT Center for Civic Media and co-founder of Global Voices, aptly summarizes:
"Over the next 10 years, I hope to see a wave of new platforms consciously designed to evoke different civic behaviors. We need mass innovation in design of social tools that help us bridge fragmentation and polarization, bring diversity into our media landscapes and help find common ground between disparate groups. With these as conscious design goals, technology could be a powerful positive force for civic change. If we don't take this challenge seriously and assume that we're stuck with mass-market tools, we won't see positive civic outcomes from technological tools."
To successfully implement civic tech initiatives, a deep understanding of the relevant areas is needed. Trust and transparency form the foundation for sustainable growth. Without the trust of citizens, authorities, and other stakeholders, even the best technologies cannot realize their potential. Therefore, it is crucial to communicate openly and honestly with all stakeholders from the beginning – from government agencies to end users.
The user experience should be oriented toward the high standards of popular consumer apps. Citizens expect intuitive, fast, and reliable digital solutions, and quality must also be right for official users.
Regular feedback from users is an important lever for continuously improving the solution. As Micah Sifry aptly states:
"Civic tech can't be neutral."
This means that founders should represent clear social values and goals.
Another key to success is the transferability of the solution. Many successful civic tech projects can be applied to other cities or regions, significantly expanding scaling possibilities.
People should always be at the center. Problems can best be solved by addressing actual needs and working closely together, rather than relying only on technical concepts. Digital competencies – both for developers and end users – play a central role here.
A strong network of journalists, government representatives, and other trusted sources is indispensable. Particularly in the areas of media and democracy, such contacts can secure access to reliable information.
Successful projects understand their target groups and transform complex civic tech content into understandable and emotional messages. These success factors form the basis for targeted investment strategies with long-term impact.
For sustainable investments in the civic tech sector, precise metrics and a collaborative approach are essential. However, evaluating social impact presents a challenge. Quantitative metrics often don't capture the actual goal, and case studies can provide a distorted picture. Most civic tech tools have fewer than 20,000 users, which questions conventional scaling metrics.
Stefan Baack, researcher at the Alexander von Humboldt Institute for Internet and Society in Berlin, explains:
"Scale of direct use can be a poor measure of impact. Often, what matters in terms of impact is how relatively small groups are using civic tech applications: e.g. minority groups that the civic tech application aims to support, or a relatively small but impactful elite (e.g. professional journalists, community organizers, NGOs etc.)"
To precisely evaluate social benefit, investors should combine quantitative and qualitative metrics. An example shows how differently success can look: While Jumo received $3.5 million in financing and still failed within a year, Govtrack.us reaches 7-10 million visitors annually – without external financing.
Collaboration between governments, civil society, and the private sector is another central approach. Projects like FixMyStreet in the UK, ProZorro in Ukraine, or OpenBudgets in Germany show how such cooperations can be successfully implemented.
Possible negative consequences of civic tech solutions must also be systematically examined and mechanisms for damage control introduced. Investors should also consider ESG risks (Environmental, Social, and Governance) and ensure that their portfolio companies comply with regulatory requirements.
Fiegenbaum Solutions supports founders in optimally aligning their strategies with ESG standards. Especially for startups in the civic tech sector, developing such strategies is becoming increasingly important. From 2025, companies in Germany with at least 250 employees, annual revenue of over €40 million, or a balance sheet total of over €20 million will be required to provide ESG reporting.
The Fiegenbaum Solutions team helps founders analyze their current ESG alignment, identify weaknesses, and develop a clear strategy with long-term sustainability goals. Through impact modeling and scenario analyses, the social impact of projects is made measurable – particularly in areas where traditional metrics often fall short.
Another focus is on technological infrastructure for data collection and reporting. Many civic tech projects fail due to insufficient data quality or missing reporting mechanisms. This is exactly where Fiegenbaum Solutions provides targeted support.
Compliance with regulatory requirements, such as those specified by the Corporate Sustainability Reporting Directive (CSRD), is becoming increasingly complex. Fiegenbaum Solutions ensures that companies can implement these requirements in a future-proof manner.
Investments in civic tech, media, and democracy are increasingly coming into focus. Given that only 41% of editors-in-chief, CEOs, and digital leaders look optimistically into the future of journalism, it becomes clear how profound the uncertainties in these areas are. At the same time, these challenges create new opportunities for investment.
An example of success in this area is reader-funded models, which show that sustainable business models are possible. 36% of commercial publishers expect that licensing revenue from technology and AI companies will represent an important revenue source in the future. This underscores how new synergies between technology and media are emerging.
The increasing importance of influencers in news consumption is also changing the rules of the game. Already one in five Americans regularly gets news through influencers on social media. Emilio Doménech, CEO of Watif in Spain, puts the challenge succinctly:
"The Trump victory has confirmed the media influence in the public is deteriorating rapidly, even more than we thought."
For impact investors, these developments offer clear areas for action. 87% of respondents believe that generative AI will completely or partially transform newsrooms. This technological dynamism creates space for innovative business models and new approaches to financing.
The diversification of revenue sources is becoming a central factor for the future viability of media companies. Products such as games, educational content, or audio offerings are gaining importance. Jeffrey Goldberg, editor-in-chief of The Atlantic, emphasizes the continued relevance of print media:
"People still derive intellectual and aesthetic pleasure from print. It doesn't beep and flash and demand that you do things. It's there to be read and enjoyed."
At the same time, security concerns in digital democracy create new investment opportunities. The European Media Freedom Act, which prohibits the use of spyware against journalists, highlights the need for secure communication technologies. The increasing online hate speech against women in politics also shows how urgently innovative solutions are needed. Security issues thus become a crucial area for strategic investments that can achieve long-term impact.
Another key to the success of civic tech initiatives lies in collaboration between governments, civil society, and the private sector. Technologies such as open source and open data not only promote community ownership but also the sustainability of such projects.
The declining user numbers of Facebook and X as news sources – a decline of two-thirds (67%) for Facebook and half (50%) for X in the last two years – makes it clear that new channels and direct relationships with target groups are becoming indispensable. These changes question established models but simultaneously open new investment opportunities.
Impact investments in civic tech, media, and democracy are not only socially relevant but also economically rewarding. The challenge lies in creating sustainable business models that can offer both social benefits and financial returns.
Civic tech, media, and democracy play an increasingly important role in impact investing. They contribute to strengthening social participation, increasing transparency, and making democratic processes more resilient. These fields offer approaches to address challenges such as access to fact-based information, promoting civic participation, or protecting democratic values.
For impact investors, these areas are particularly interesting because they not only achieve positive social effects but often also produce sustainable business models. Startups in these sectors develop technologies and platforms that strengthen trust in institutions while offering economic potential. This creates investment opportunities that generate both social and economic value.
Investments in civic tech and media open new possibilities to counter disinformation and strengthen civic participation in Germany. Digital platforms play a central role: They give citizens the chance to actively participate in political processes and help promote trust in democratic institutions. At the same time, they ensure more transparency and facilitate access to reliable, fact-based information.
Such technologies can specifically expose and combat disinformation campaigns, strengthening social cohesion. By creating spaces for dialogue and participation, they make democracy more resilient and open to different perspectives. For investors and founders, these areas offer not only a positive social contribution but also exciting economic prospects.
In the areas of civic tech, media, and democracy, exciting business models are emerging that offer both social benefits and economic viability. Particularly interesting are cooperative structures that focus on participation and collective ownership. A good example is Das Neue Amt in Altona, which combines co-working spaces, neighborhood meeting points, and creative workspaces under one roof – a concept that promotes community and collaboration.
Another trend is hybrid financing models that combine various sources such as public funding, impact investments, and community-based financing. These approaches enable the realization of projects that focus on social sustainability, participatory decision-making processes, and resource-efficient technologies. Such models not only strengthen democracy but also contribute to building an informed and future-oriented society.