How we can better fund the scaling up of capital intensive climate tech hardware startups in the UK?
Fiona, Will, Di and Will listen to the audience’s questions
November 2023
Featuring: Featuring: Will Dufton, growth investor, ex-Omers and Atomico; Di Gilpin founder and CEO of Smart Green Shipping, Will Wells, Venture Partner at firstminute capital and Norrsken;
The transition to a net-zero economy requires significant capital, yet funding climate tech hardware startups remains a major challenge. At the recent EarthSet meet-up on November 7th, industry experts came together to discuss how to scale capital-intensive climate tech innovations in the UK.
The Funding Challenge
Startups developing breakthrough climate technologies face a critical “valley of death” at the First-Of-A-Kind (FOAK) stage, where they need large-scale infrastructure funding to commercialize their solutions. Venture capital (VC) has traditionally focused on software, while infrastructure funds hesitate to invest in unproven hardware.
Real-World Case Study: Smart Green Shipping
Di Gilpin shared her journey in securing funding for Smart Green Shipping’s FastRig technology—recyclable aluminium wing sails designed to cut shipping emissions by up to 30%. She highlighted the challenges of convincing investors to back hardware-intensive projects and the creative strategies she used to secure capital.
Potential Solutions and Path Forward
Will Dufton and Will Wells explored strategies to bridge the funding gap, including:
Blended Finance Models: Combining public and private capital to de-risk investments.
Corporate Partnerships: Leveraging industry players to provide capital and market access.
Growth Equity & Neo-Industrialism: Shifting investment strategies beyond software-focused VC.
Government Incentives: Aligning UK policies to counteract competitive US funding via the Inflation Reduction Act.
Final Takeaways
The panel emphasized the urgency of aligning investors, policymakers, and industry stakeholders to create new funding mechanisms. Collaboration across the ecosystem is key to unlocking the full potential of climate tech hardware startups and driving the green transition.
