Clean Growth Fund Secures £49m for Second Fund to Accelerate UK Climate Tech

With £49 million in the first close of its second investment vehicle, the UK's specialised climate technology venture capital firm, the Clean Growth Fund has a £150 million goal to stimulate innovation in low-carbon technologies. This new stage draws on the success of its first fund and points to increasing investor confidence in the UK's climate tech sector at a time the country is ramping its efforts to reach net zero. 
 
The success emphasizes the drive behind sustainable finance as both current investors and new backers pledge funds. Recognizing the chance to back cutting greenhouse gas emission technologies and provide long-run financial rewards, pension funds have been especially busy. Among the supporters are newcomers such as Islington and East Riding LGPS as well as Strathclyde Pension Fund, who had already invested in Fund I. Their involvement shows the confidence put in the Clean Growth Fund's disciplined strategy, which gives equal weight to verifiable environmental effect and strong business performance. 
 
Fund II launches at a crucial time for climate innovation in the UK. Policymakers are urging institutional investors, particularly pension funds, to invest more capital in high-growth sectors like green technology. Part of the Mansion House Compact, a program designed to free up pension investment in creative industries critical for the future of the country, this will help. The Clean Growth Fund is well placed to direct institutional funds into early-stage companies creating workable solutions to reduce emissions by matching this strategy. 
 
Central to this momentum is the Fund's past under its first initiative. Fund I supported nineteen companies throughout its investment cycle, all of which are in areas closely linked to decarbonisation. By 2030, these companies are expected to stop over 55 million tonnes of carbon dioxide equivalent emissions. This real impact has increased investor confidence, demonstrating that commercially successful as well as environmentally friendly projects are feasible.

Among Fund's most notable accomplishments One of the pioneers of zero-emission transportation refrigeration systems, I is Sunswap. Including DFDS and Tesco, leading logistics and retail players are already eyeing these systems, which represent a significant move toward decarbonising supply chains. One further notable asset is Rendesco, a company creating low-carbon ground-source heat networks. It offers a scalable solution for reducing building emissions, one of the most energy-intensive industries in the United Kingdom, with over 400 finished projects and a £100 million pipeline. Additionally backed Above, a firm employing robotics, artificial intelligence, and computer vision to improve solar plant output. Above, a 50 per cent revenue increase between 2021 shows the commercial potential of digital technologies in clean energy. 
 
Fund II will build on these successes by further funding early-stage firms, with first investments ranging from £500,000 to £5 million. The six main areas of this strategy—power and energy systems; transport and mobility; industrial decarbonization; buildings; agrifood and land use; and the circular economy encompassing waste and water—are in line with the most difficult hurdles in reducing greenhouse gas emissions. This wide lens acknowledges that progress in only one industry cannot deliver net zero. Rather than that, development demands innovation throughout the whole economy, from how food is produced to how waste is handled and how electricity is produced. 
 
With great possibilities for electric and hydrogen-based solutions, transportation and mobility are still top priorities. New techniques can assist major sectors like steel and cement in reducing their carbon footprint in industrial decarbonisation, while heat networks and energy efficiency improvements are still crucial in the buildings sector. Another developing area is agrifood innovation, where start-ups are exploring means to reduce farming and food manufacturing emissions. Opportunities abound in the circular economy for lowering trash, enhancing recycling, and generating worth from materials otherwise thrown away. 
 
Along with funding, the Clean Growth Fund is becoming more involved with entrepreneurs and innovators all around the nation. Beginning in Glasgow, it has started a Climate Tech Roadshow meant to link entrepreneurs with investors and partners in the ecosystem. This initiative is part of a wider effort to ensure that regional talent and innovation hubs outside London also benefit from access to growth capital. Supporting founders at the local level is seen as crucial to building a diverse and resilient climate tech ecosystem across the UK.

The fund's methodical method has improved investor attitude. Its capacity to combine strict financial analysis with a clear emphasis on quantifiable climate results has garnered praise from backers. Legal counsel partnering with the fund have also noticed its ability to connect investors with strong management teams, so guaranteeing that businesses are well prepared to expand their technologies. The ideal for sustainable investment seems more and more to be this mix of financial discipline and impact orientation. 
 
The wider market context also supports the Clean Growth Fund’s approach. Climate technology has become one of the most attractive areas for investors globally, with growing recognition that decarbonisation is not only a necessity but also a source of long-term growth. The UK has positioned itself as a hub for climate innovation, with strengths in renewable energy, digital technology, and advanced manufacturing. By focusing on early-stage investment, the fund is helping to ensure that new ideas have the resources needed to develop into commercial successes that can contribute to the national net zero strategy. 
 
The announcement of the £49 million first close of Fund II therefore represents more than just another funding round. It is a marker of the increasing maturity of the UK’s climate tech sector, demonstrating that investors are willing to commit significant resources to support its growth. It also signals to entrepreneurs that there is capital available for ambitious ideas, encouraging more founders to enter the space. 
 
As the Clean Growth Fund progresses towards its £150 million target, the expectation is that more institutional investors will follow, adding weight to the growing trend of sustainable finance. The success of Fund I and the confidence in Fund II underline the fact that investing in climate technology can deliver measurable emissions reductions, support high-quality jobs, and create commercial returns. With its focus on early-stage companies and its alignment with national policy goals, the fund is set to play a key role in the UK’s transition to a low-carbon economy.