Clean Growth Fund, a UK climate tech venture capital firm, has raised £49m (€57m) in the first close of its second fund, finding more takers among the local government pension scheme (LGPS).
The fundraising saw two of the firm’s first fund investors, including Strathclyde Pension Fund, recommit to Fund II, with the Scottish pension plan joined by new investors Islington and East Riding LGPS schemes.
Clean Growth Fund is targeting £150m for Fund II. It said the first close “reflects the growing sector confidence in the CGF’s track record and the strengths of the climate tech ecosystem”.
It also said it reflected alignment with the UK’s Mansion House Compact, which calls for greater investment from pension funds into high-growth sectors of the UK economy, including venture capital and climate innovation.
The firm describes itself as being able to offer LGPS and other institutional investors “a credible and focused route into early-stage investing that combines climate impact with the potential for long-term commercial returns”.
Ian Jamison, investment manager at Strathclyde Pension Fund, said: “Clean Growth Fund’s combination of rigorous investment discipline, clear climate impact and a strong focus on delivering commercial returns made our decision to reinvest straightforward.
“The UK needs mission-driven, sector experts like CGF to lead in net zero delivery.”
Paul Convery, chair of the pensions committee at Islington Pension Fund, a newcomer to Clean Growth Fund’s investments, said: “Clean Growth Fund’s deep expertise in climate tech, combined with disciplined venture investing, made them a compelling partner for our first step into this space.”
Fund II will continue Clean Growth Fund’s strategy of investing in UK-based, early-stage companies developing technologies with high potential to cut greenhouse gas emissions.
It said the fund will deploy initial cheques of £500k to £5m million, targeting innovations across six core areas:
- Power and energy systems
- Transport and mobility
- Industrial decarbonisation
- Buildings and the built environment
- Agrifood and land use
- Circular economy, waste and water
Beverley Gower-Jones, managing partner at the VC firm, said that raising capital in this market isn’t “easy”, especially with global political uncertainty affecting climate policy momentum.
She continued: “Despite this, the UK continues to stand out as a hub for climate innovation – and the strong first close of Fund II reflects the trust our investors place in our team and our mission.”
Fund I invested in 19 breakthrough climate tech startups now projected to reduce over 55 million tonnes of CO2e by 2030.
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