FOAK Finance in the UK: what's next?
June 2024
Featuring: James Eaton, Ionetic; Swarnali Mitra, Cur8; Sarah Mackintosh, Director of Cleantech for UK; Mo Niknafs, Deep Science Ventures; Sarah Tennison, Head of Clean Growth Strategy and Impact at Innovate UK
Last week our Earth Set event was held in conjunction with Cleantech for UK and supported by Innovate UK. Unlike our traditional panel discussions, this event took a different approach: a series of short, high-impact presentations aimed at sharing deep knowledge rather than merely exchanging viewpoints.
What Is FOAK Finance, and Why Does It Matter?
FOAK, or First-of-a-Kind, represents a critical juncture in the development of novel climate technologies—when a startup moves from a pilot stage (typically funded by grants and venture capital) to commercial-scale deployment (which requires large-scale project financing). Despite its importance in achieving net-zero goals, securing FOAK funding remains a significant challenge, often referred to as the “valley of death” in investment circles.
The Harsh Reality of Raising FOAK Capital in the UK
The event kicked off with research findings from Rennison and Sarah Mackintosh, Director of Cleantech for UK. They examined the 50 largest climate tech deals raised by UK-based companies over the past six years. The results were sobering:
Only 10 out of the 50 deals involved funding for FOAK climate infrastructure or hardware.
The largest FOAK deal in the UK was £125M—dwarfed by the 50th largest climate deal in the US, which stood at $350M.
The UK government’s role in FOAK investment was minimal, with only one company (British Volt) receiving significant government funding—and it has since gone into administration.
Eight of the ten FOAK-funded startups had overseas investors, raising concerns about whether the UK is truly benefiting from its own innovation.
Founders’ Struggles: A System That’s “Not Fit for Purpose”
One of the most striking takeaways came directly from James Eaton, CEO of Ionetic, who is currently navigating the FOAK funding process. Many founders shared similar frustrations:
The extreme difficulty in finding the right investors, with one CEO stating they had "the same conversation 200 times with investors who ultimately said no."
Government inconsistency and lack of strategic commitment, with one founder describing engagement with officials as a "low-satisfaction activity."
Slow and bureaucratic processes, including a 11-month delay for one company’s grid connection, which was further pushed back to avoid interfering with local Christmas shopping.
The attractiveness of the US market, with several founders noting that the Inflation Reduction Act (IRA) offers a clearer, faster, and more financially viable pathway for scaling their climate technologies.
The Path Forward: Solutions from Industry Leaders
While the challenges are real, the event also featured four forward-thinking speakers presenting potential solutions to improve FOAK finance in the UK:
Mo Niknafs (Deep Science Ventures) is launching an accelerator program specifically for FOAK founders, equipping them with the knowledge and networks needed to overcome key scaling hurdles.
Swarnali Mitra (Cur8) has successfully pioneered innovative financing models for FOAK, including a groundbreaking carbon finance debt deal with strategic investors.
Sarah Tennison (Innovate UK) discussed new initiatives designed to bolster FOAK infrastructure support and unlock additional funding pathways.
Sarah Mackintosh (Cleantech for UK) outlined key policy recommendations, emphasizing the need for government clarity in procurement and regulation, and stronger incentives for private capital investment in FOAK projects.
The Takeaway: A Call for Change
The urgency of climate action means that we cannot afford to let FOAK companies flounder due to financial and bureaucratic barriers. The event reinforced the need for:
Better alignment between government and investors, ensuring more consistent and accessible funding mechanisms.
Stronger incentives for UK-based investment, so promising startups aren’t forced to seek capital abroad.
A rethinking of risk appetite, shifting away from an over-reliance on software and SaaS investments toward real-world climate solutions that require hardware and infrastructure.
The FOAK Finance event was a wake-up call—but also a beacon of possibility. With the right funding models, government commitment, and investor mindset, the UK can unlock the full potential of its climate tech sector and drive the innovations that will define our net-zero future.
