Climate Tech investment and innovation: challenges and opportunities

Guy Hayler is co-founder of Blue Earth Summit, a 5,000 strong annual event in London that connects climate tech and planet positive innovators, investors, campaigners and policy makers. 

This year, Blue Earth has launched a brand new climate tech competition BE100 that will enable 1,000 environmental startups to connect with investors and secure funding worth over £100 million.

In the climate sector Guy Hayler is known as a ‘super connector’. He has built a reputation helping to connect investable planet positive businesses with impact investors looking for emerging and exciting businesses ready to scale. 

“Connecting investors with innovation is in my DNA. I come from an entrepreneurial family background so it's always felt natural to build a network of people who inspire me and feel the same about the climate crisis”.

Here Guy Hayler outlines five key areas essential for investors to consider when investing in the climate technology sector.

Profit and passion 

Whether innovators or investors, I always look for like-minded people who want to protect the environment. Individuals that are not driven exclusively by short term gain but recognise the myriad of growth and return opportunities in the climate sector.

Richard Walker, Executive Chairman of Iceland Foods is a great example and a good friend of mine – we go surfing together! His store chain has a healthy marketplace position with a £4 billion turnover. But his drive doesn’t end there. He’s been called the ‘green’ grocer because of his personal and business commitment to a healthy environment and protecting nature.

Business people like Richard are super successful but they’re also driven by positive impact, born out of a love for the natural world. A mindset that combines positive impact, personal passion, and profit is an exciting new breed of business leaders.

“I’m excited that I can help scale super profitable businesses – that will leave a positive legacy for our world.”

Don’t dwell on the status quo

The blame for global warming or climate change? It can be laid at many doors. Government leaders and policy makers, the gas and oil industry, or in the case of fashion waste, global human habit and behaviour. But I don’t blame or look backwards. It’s not a useful approach that will ignite the change we need. Myself and my co-founders at Blue Earth are out there looking at 100s if not 1000s of startups every year fixing problems from the ground up. And that’s the future we want to support. It's inspiring. 

“We're a team of optimists at Blue Earth. We’re surrounded by entrepreneurs creating new solutions and fixing planet health problems on a daily basis”

Financial institutions, whether VCs or investment banks recognise the next unicorns will come out of the climate space and that’s really exciting. The climate sector has a current turnover of £344.6 billion and is growing at 11% per year. Things are definitely changing and more governments are recognising they need to support opportunities. Some of this legislative change is already happening.

The European Council announced this month that it has approved the Net-Zero industry Act (NZIA), a new law introducing a framework of measures aimed at scaling up Europe’s manufacturing capacity for technologies key to achieving the EU’s climate goals. It has also introduced a framework for new sustainability requirements for all products sold across the EU as well as a new ban on the destruction of unsold textiles and footwear.

What’s more according to London & Partners, London-based climate tech startups raised $3.5 billion, ranking second globally in terms of investment in the sector.

In the UK, the climate crisis might not be at the top of the UK government’s agenda but it’s climbing fast for investors. They can see the returns in existing businesses and now they know they can get the return too.

Inform and educate

Being labelled a climate business ‘super connector’ is a compelling description but I see my role as going way beyond simply networking connections. Part of my role is about informing. Much of it is about understanding. There are knowledge gaps in the climate sector. Innovation is widespread, data is often hard to find, and influential legislation can be somewhat hidden.

I think that’s why Blue Earth has grown in popularity for business leaders, investors, VCs, and Founders. Our growth is reflected in a parallel change of attitude to planet positive innovation. Resistance is becoming a thing of the past.

So for me, it's about sharing timely insights with investors and innovators. Being alive to important and emerging trends. The climate sector is a global sector where changes are fast moving. But no-one can ignore the opportunities in the impact space any more.

Know where to look

Despite a growing appreciation about climate sector innovation and opportunity, investors want guidance on where to look and why. 

In my view, there are a couple of industry categories that are getting plenty of attention right now.

Agritech and food system transformation. Farming practices are slowly changing and so is investment for protecting our natural world. It’s clear that our current food system is broken. 

Industrial farming is destroying soil, wildlife, land quality, and biodiversity. Not to mention food security. It's an urgent problem that needs resolving. A 2024 report from Oxford University and London School of Economics reported that if we continue business as usual, we will needlessly carry billions of avoidable costs, whereas transforming food systems could save $10 trillion per year.

There are some exciting players in this space from lab grown meats to technology that can track the quality of farmland and new green sustainable chilled food transport systems.

The time it takes

Naturally investors are impatient. They’re looking for the fastest returns. But innovation in the green sector takes longer so I urge investors to think differently. 

Returns in the climate sector may take longer to realise but the opportunity could be bigger. Higher risk and higher reward. Perhaps this is the biggest challenge facing the climate space but entrepreneurs are already providing competitive results and financial returns are being realised. 

According to Tony Seba and James Airbib, co-founders of Rethinkx – research specialist in transformative technology: “We are on the cusp of the fastest, deepest, most consequential transformation of human civilization in history.”

Whilst Series B funding is still a challenge for many planet positive business leaders, I am hoping that as impact investing is becoming more mature, the returns are more visible and so investor commitments becomes an easier choice. 

Blue Earth Forum takes place between 25 and 26 June 2024, a flagship event for London Climate Action Week. Blue Earth Summit takes place between 16 and 18 October 2024.