Tech Nation, the UK’s growth platform for tech scaleups, has published its Climate Tech Report 2022 ahead of COP27 this month.
It revealed that international investment into UK climate tech companies has almost doubled, rising from $4 billion in 2021 to $7.5bn so far in 2022.
While the trend is increasing for the UK and on a global level, this is not the case for all countries. Investment in the US, Germany and Sweden seems to be slowing down, receiving $2.1bn, $4.5bn and $2.2bn less investment in 2022 so far – compared to 2021 – respectively.
The report says the UK is on track to see climate tech companies raising nearly $20bn per year by 2030. It is second only to the US for the number of companies working to address the climate crisis, with over 5,200 climate tech companies in the UK to date, compared with 14,300 in the US.
The UK has 8 climate tech unicorns, each valued at more than $1bn: Octopus Energy, Newcleo, Depop, ITM Power, Ceres, OVO Energy, Smart Metering Systems (SMS plc) and Vertical Aerospace.
The UK has a further 19 future climate tech companies on their way to becoming unicorns, currently valued between $250m-800m, showing a healthy pipeline of climate pioneers in the UK.
However, the UK’s climate tech ambitions are dependent on policy to fuel continued innovation. Amidst concerns that R&D might be cut, Tech Nation is urging the government to protect R&D funding to help drive us towards Net Zero.
A report from the IPPR suggests the UK lags £62bn behind in R&D, with investment falling by a fifth since 2014 and with the UK now placing just 11th in the OECD in terms of total R&D investment as a percentage of GDP, well behind countries like Austria, Switzerland and the USA.
“It is imperative we match the rhetoric ambition of making the UK a ‘forward facing, science superpower’ with the R&D commitment needed to achieve this,” said Gerard Grech, chief executive at Tech Nation.
“COP27 focuses the mind; new technology development is critical for solving acute global challenges such as carbon reduction and climate change, and deep tech will be an ever more essential component of the tech ecosystem.”
Tech Nation is currently running its Net Zero and Net Zero X growth programmes for early-stage and late-stage climate tech companies respectively, and these trends are reflected in the newest company cohorts.
Among their latest cohorts are companies who are working on algae engineering (such as Kelpi, Phycobloom and Phycoworks), and half of the companies joining each programme are working to decarbonise the UK’s energy sector (such as Filia, Electric Miles and Equiwatt).
Tech Nation’s Net Zero programme has seen its first cohort of companies increase their collective funding by over £150m since completing the programme – an average increase of £5m each – while its second cohort has increased their collective funding by over £100m in the past six months.
Since joining Net Zero, these early-stage companies have grown so rapidly that over half of them (11 of 20) have been accepted into Tech Nation’s Net Zero X programme for late-stage climate tech businesses.