Why is the Clean Growth Fund needed?
It’s been clear for many years that there has been a need to improve venture capital funding of clean tech firms in this country. One body in particular, the Green Finance Taskforce, had identified this funding gap and made a recommendation to Government on how to stimulate investment in the sector. The Government responded favourably and saw the public/private sector Fund as one means to help deliver its Clean Growth Strategy and achieve Net Zero.
The Government sees the Clean Growth Fund as a catalyst to increasing private investment in the clean tech space. With the Fund backed by the Government and CCLA to the tune of £40m, we aim to increase the size of the Fund to more than £100m by the end of 2021, and make our first investments before the end of this year.
What’s your role as Managing Partner?
The Government (BEIS) selected Clean Growth Investment Management LLP (CGIM) to manage the Fund, with me as its Managing Partner. I lead a team consisting of NorthStar Ventures, which has extensive VC knowledge, and the incubation consultancy, Carbon Limiting Technologies which has deep technical knowledge of the clean tech sector. I co-founded CLT and before that I co-founded Shell Technology Ventures.
In short, the team have a deep understanding of disruptive clean technologies, as well as knowledge of emerging trends and of those companies that will have a large impact on the growing low carbon economy.
Ultimately, I’m responsible for the Fund’s investment strategy and delivering the best returns for our investors.
How will you build the Fund to £100m by next year?
It helps massively that BEIS and CCLA, one of the UK’s largest fund managers, have made their commitments and we need to leverage this. We are already talking to potential investors, principally institutions, corporates, family offices and High-Net-Worth-Individuals. I’m confident that, against the backdrop of #buildbackbetter / green recovery, we will reach our target.
We are operating as a commercial VC fund, so we have the optionality of co-investing in individual opportunities alongside retail and high-net-worth angel investors. In such scenarios, the HNWs will be able to access available (S)EIS tax reliefs.
Is a £100m Fund sufficient to make a real difference?
We feel that the clean growth VC market, as it is now, would struggle to deploy more than £100m at this time.
Will Covid-19 impact on the success of the Fund?
The impact of COVID-19 on the long-term prospects of the Clean Growth sector is being reported on favourably.
COVID-19 has resulted in reduced liquidity in the venture capital market. The Fund will provide much-needed investment into early stage companies looking to commercialise their product or solution. In the longer term, the clean growth sector will help to re-invigorate the economy: Clean Growth Fund backed early stage companies will be “pulled through” as a result.
How is the Clean Growth Fund different from any other VC or environment/clean tech investment fund?
The Clean Growth Fund is commercially driven, aiming to make a commercial return the same as any other VC fund. The Fund will actively provide portfolio companies with hands on incubation support, drawing on the services of Carbon Limiting Technologies.
What are the investment horizons and expected returns for the Fund?
The Clean Growth Fund has a 10-year horizon and expects to make the majority of its investments in the first 5 years. The Fund expects to make commercial returns.
When will the Fund make its first investments?
We are looking to invest in at least two companies between now and the end of the year. We already have an active pipeline of investment opportunities and we have received over 250 applications since the Fund was launched in May.
It’s hugely exciting. We are going to be busy.