Could 2024 be the best year yet for climate tech startups in the UK?

The latter part of 2023 saw UK’s climate tech startups raise all time high levels of VC investment. In 2023, climate tech made up 23% of Foreign Direct Investment (FDI) into London – twice the amount of 2022.  

Last year the UK government co-launched the Cleantech for UK initiative, with Bill Gates and a coalition of startups, investors, and businesses, to accelerate UK cleantech innovation.

With London Climate Week on the horizon in June 2024, it’s a great time to spotlight the health of climate tech startups in the UK. And share some  marketplace insights and growth tips from investors and experts in this sector.

London ranks second in the world for securing investment in climate tech startups and scaleups. Climate tech investor, Amy Rennision believes that: “London's strong presence in the global venture capital industry has given it a head start in the climate tech space, as well as the UK's elite universities where so much science and discovery that drives innovation takes place.”

Rayan Jawad, Co-Founder of Growth Studio, believes that the business culture of London has the unique ingredients to support climate tech innovation.

London has the capability, skills, and most importantly commitment to achieve net zero by 2050,” says Jawad, whose business focuses on helping climate and planet positive startups accelerate their solutions and secure investment. “Even if the political will looks to waver, business culture remains steadfast to becoming a cleaner society.”

Julian Topham is Chairman of Blue Earth Summit, an event that brings together planet positive innovators, investors, and campaigners, coming to London in October. He points to a changing appetite in the investor community that is helping climate tech innovators secure the attention they need. “The increase in purpose-led investing follows changing social trends and habits, as well as increased regulatory pressure, creating opportunity and a market for climate-orientated businesses.” 

So how can climate tech startups take advantage of the developing opportunities available here? What’s the playbook for driving startup success in a competitive environment like climate tech innovation or even a single city like London?

Here’s five ways to catapult your climate tech startup success with tips from the experts!

Where’s the need?

Rule 101 for any startup, whatever sector, is product market fit. Ask yourself what’s the need you’re addressing and is your solution fit for purpose? In other words – why will consumers or businesses need your product or buy your service?

By way of example, just this month, UK startup Unwritten raised over €3 million for their business. They’re on a mission to make climate change part of every investment decision, helping investors and companies to make financial sense of the climate transition.

So, what’s the  need they’re addressing? Most financial decisions don’t consider the risks and opportunities related to climate change, hindering the flow of capital. Unwritten provides an urgent need in filling financial knowledge gaps to inform better decisions.

Suss the support

At the early stage of any startup growth, founders may recognise their own lack of knowledge or missing team expertise . Or they need access to markets, partners, or investors that are not in their network. At this stage of growth, accelerator programmes can play a significant role.

Paul Finch is Co-Founder of Breathable Cities, a programme for tech startups tackling air pollution. His team have helped raise £20 million for global startups and £5 million for air quality startups. His advice is to research and thoroughly prepare before joining a programme.

  • Be considered. Choose the right programme, not just one that invites you!
  • Have a clear measurable goal to leave the programme with and track it weekly
  • Be entrepreneurial – work with the Programme Team to get introductions to investors and partners, and help them generate mutually beneficial stories and PR
  • Go fully-in. Immerse yourself in the sessions, mentors, and workshops to maximise your skills, tools and profile. But call it a day early if you don’t think it’s a good fit for you and them

Clearly, selecting an accelerator programme with specific climate tech expertise would be key but startup support comes in many guises and access to funding is one of them. Knowing where and how to access capital is critical.

Are you fit for funding?

Climate tech funding is predicted to increase further in 2024 and according to climate tech investor, Amy Rennison: “There is hope for a better 2024 (climate tech) feels like a space that is attracting dynamic people with a thirst for change.”

Rayan from Growth Studio advises climate tech startups on investment strategies. He emphasises the need for a clear business case. Key questions to ask yourself include: Do you have the right team? What fundraising skills could be missing? Do you have the personal energy and the wider support? This doesn’t simply mean looking at a new Board of Advisors but potentially recognising the support needed from families too.

And importantly, clearly outline the evidence that supports your solution. Gather primary proof points and credible data that shows your target stakeholders or customers are willing to purchase your product.

Work the room (or the city!)

Knowing about key trends in your sector , who’s valuable to your business and where the power networking is going on, is key at the early stage of growth.

For example, London Climate Week 2024 will see major players gather in the city to explore innovations and opportunities. At the heart of the two days in June is the Blue Earth Forum. 1,000 climate tech and planet friendly startups will be invited to pitch for £10 billion of investment available. In fact, you can apply now!

Not everyone loves networking, but practice will give confidence. Keeping your finger on the pulse of relevant conferences or joining likeminded meet ups is critical to creating opportunities – enabling those unpredictable serendipitous moments that many founders benefit from.

What’s coming next?

Knowing what’s emerging in terms of innovation or regulation will help identify both competition and opportunity for any business designing its growth path.

Sometimes startups undertake many iterations or pivots and often that’s important to hyper tune product market fit.

Julian Topham believes the growth (and value) in knowledge is an exciting arena in data led innovation: “There is still a lot to discover around environmental issues and solutions, and specifically where real positive differences can be made, without creating negative impact elsewhere.”

Rayan Jawad is predicting developments in the built environment to mitigate climate risk: “This sector is one of the biggest emitters of CO2. Combined with falling portfolio values as investors seek to divest from properties that are less environmentally friendly in favour of  buildings better adapted to the changing climate, we can expect this sector to boom.”

As much as 90% of 2050 baseline man-made emissions could be abated with existing climate technologies, says a recent McKinsey report. So, the role of startups launching new solutions is essential.

 In the words of Will Hayler, CEO of Blue Earth Summit and B100: “We recognise that time is running out to protect our planet. But we know an entrepreneurial approach and the energy of startups will catapult solutions to urgent planetary problems.”