PWC’s Climate Tech/Venture Capital report: big money being invested but I’m sorry there’s still much to do
Beverley Gower-Jones, Managing Partner of the Clean Growth Fund
At the end of last week, PWC’s published a 60-page report on the state of climate tech investing. It provides a global perspective on the level and types of investment between 2013 and 2019.
I was struck by the huge amount of money that’s been invested in early stage companies and the rapid growth: US$418 million in 2013 to US$16 billion in 2019 and three times the growth rate of VC investment into Artificial Intelligence.
The report shows that half of all venture dollars (US$29 billion) in climate tech went to startups in North America, followed by China (US$20 billion).
That all sounds great, given the climate emergency and the journey to Net Zero, but from where I’m sitting (and given my long involvement with the UK clean sector), we should treat the PWC report with some caution. Investment in the UK clean tech sector has a way to go.
Having worked within the clean sector for nearly 15 years, helping start-ups to grow and commercialise, what’s been abundantly clear is the lack of capital at seed and series A.
Research from the Ascendant Group identified that between 2013 and 2017, investment in UK internet services far outweighed investment in clean/climate tech. Between £138 million and £272 million per annum was invested in clean/climate tech over the period compared to a constantly increasing funding into internet deals – £259 million in 2013 to £3billion in 2017, a 12-fold increase. In 2017 alone, thirteen times the investment went into internet services than in clean/climate tech – in the UK.
Closer to home, the PWC analysis shows that London only features as a global climate tech investment hub (6th with US$350 million funds invested) when all investment in transport and mobility is removed from PWC’s dataset.
There’s clearly much to do to balance the levels of investment, and so accelerate the work towards delivering Net Zero by 2050. That’s the main reason for the Clean Growth Fund.
The Fund’s senior management team are working hard to realise my ambitions for the Fund. Collectively, we have considerable experience of early stage venturing and deep knowledge of the clean/climate sector – in the UK and overseas.
The Fund achieved first close in May 2020 and we are aiming to increase the Fund to beyond £100m within the next 12-18 months. And we will soon be announcing our first investment.
The PWC report examines six specific sectors: energy, mobility & transport (where 98% of Chinese investment has gone towards), food/agriculture & land use, heavy industry, the built environment, GHG capture & storage, and climate/earth data & generation. The sectors, being the areas of the biggest growth and opportunity, understandably correspond with the areas that the UK Clean Growth Fund is focusing upon.