As the UK retained its position as the largest venture capital market in Europe last year, the sector that saw the most impressive growth was cleantech, with 140 funding rounds – up 47% from H2 2021.
With the UK’s VC market larger than France and Germany combined, the number and value of announced equity deals secured by cleantech businesses is continuing to have an upward trajectory that has been particularly noticeable since 2018.
A report by Beauhurst took a closer look at the increasing popularity of cleantech businesses.
In 2021, the world was under growing pressure as the climate and energy crises became more apparent following COP26, and public climate protests grew as people urged their governments to take stronger climate action.
Alongside politicians who have increasingly turned their attention to green and clean technology and its dominant place in the global climate agenda, investors have been participating more than ever in deals putting money behind climate change solutions.
Indeed, what used to be a niche sector in the UK, that predominantly attracted impact investors, is now attracting more mainstream funds.
Cleantech is quickly becoming a priority for regional firms, as well as those operating in the energy, utilities, and infrastructures space, following the crowd in future-proofing their investments.
The Scottish bank stated that, “More institutional and private investors see the opportunity in financing what will likely be cornerstones of how a business operates in the future”.
Importantly, as the climate crisis has become a major issue to the mainstream consumer, businesses in the next 30 years, within every industry, will need to transition to net zero carbon emissions by taking on genuine climate initiatives.
The estimated levels of investments needed to achieve net zero are $5-7 trillion. This staggering amount will not be achievable without entrepreneurs and the investors who back them.
Cleantech deals skyrocketed between 2020 and 2021, as the UK saw an impressive 50% increase in pounds deployed to the UK cleantech companies, landing on £945m raised throughout the year.
One of the UK’s biggest startup success stories of 2021 is the cleantech company, Britishvolt.
Britishvolt was founded by a Swedish entrepreneur, Orral Nadjari. It is a clean-tech firm that designs and manufactures sustainable lithium-ion batteries, principally for use in electric vehicles (EVs). By August of 2021, Britishvolt had become a unicorn.
In doing so, it joined the EV company Arrival and renewable energy firm OVO in the herd of UK cleantech unicorns – referring to companies that have reached a one billion dollars valuation without being listed on the stock market, at less than two years old.
Here are the biggest cleantech deals of 2021
- Flexion energy, £150m
- Vertical Aerospace; £149m
- Plastic Energy, £124m
- Tevva motors, £42.5m
- Intelligent growth solutions, £42.2m
It is no surprise that we are seeing a growing number of high-growth UK companies operating in this space, as cleantech continues to emerge as a hugely successful and important sector. Undeniably, the future of cleantech is very promising.