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Panelists at the Business Green Technology Festival 2019

CLT presents and Business Green Technology Festival

CLT’s Principal Consultant Jeffrey Beyer discussed new approaches to aligning start-ups and investors to boost investment into clean tech.

Speaking on the panel titled Winning over finance: Building the business case for early stage technology, Jeffrey described the scale and recent track record of investment into clean tech, and what can be done to increase investment into the sector. There is a disconnect between the need for clean technology innovation to cost-effectively achieve climate change targets, and the relative dearth of investment into the sector compared to other sectors like fintech, pharma or IT.

Jeffrey highlighted the challenge of the ‘missing middle’ in clean tech financing: the government supports early-stage innovation and VC investors are happy to invest in good post-revenue businesses, but pre-revenue SMEs in the middle of this journey struggle to access capital. Pre-revenue capital investment is required to pay for technology demonstrations, which tend to be more expensive for clean tech than other sectors. This ‘missing middle’ funding gap means many good ideas often die in the lab before getting the track record needed to commercialise and scale up.

To help overcome this gap, a stronger clean tech financing ecosystem needs to be developed that guides early stage innovators through an investment pathway from angel to Seed to Series A and beyond. This joined-up approach along the investment chain would help clean tech entrepreneurs find interested funders to take their innovations to next stage, allowing them to dedicate time to business growth activities other than fundraising. It would also help investors find a pre-qualified pool of high quality innovations that have been vetted by upstream investors in the chain, and help them make profitable exits when the time is right.

Proving that clean tech is a profitable sector would also help unlock investment flows. Funds like the UK Government’s Clean Growth Fund are helping to demonstrate the viability of clean tech, and are intended to show established investors that clean tech can pay both commercial and environmental dividends.