Clean Grown Fund (CGF), a UK-based climatetech VC firm, has raised £49 million (US$62.5 million) for its second fund, working towards a £150 million (US$191 million) target.

Founded in 2020, CGF invests in early-stage UK startups aiming to cut greenhouse gas emissions or improve resource efficiency.

Fund 2 will invest between £500,000 (US$637,500) and £5 million (US$6.4 million) in six areas: power and energy systems, transport and mobility, industrial decarbonisation, buildings and the built environment, agrifood and land use, and the circular economy, waste and water.

Two previous investors, including Strathclyde Pension Fund, have returned for fund 2, joined by new investors Islington Pension Fund and East Riding LGPS.

CGF’s first fund backed 19 climate tech startups, projected to cut over 55 million tonnes of CO2e by 2030, including Sunswap (zero-emission refrigeration), Rendesco (low-carbon heat networks), and Above (solar robotics).

Managing partner Beverley Gower-Jones said raising capital is tough due to global political uncertainty affecting climate policy, but noted strong investor trust and UK climate innovation.

🔗 Source: Tech.eu

🧠 Food for thought

1️⃣ Climate tech fundraising challenges reflect broader market downturn

Clean Grown Fund’s struggle to reach its £150 million target mirrors the broader difficulties facing climate tech investors worldwide.

Climate tech investment dropped 29% from 2022 to 2024, with total funding falling to $56 billion globally 1.

Despite this decline, climate tech has shown relative resilience compared to other sectors. While overall VC and private equity investment fell 50.2% in 2023, climate tech investment declined by a smaller 40.5% 2.

The fund’s managing partner’s comment about “global political uncertainty affecting climate policy momentum” aligns with industry-wide headwinds that have made capital raising particularly challenging for specialized climate funds.

However, the sector’s long-term trajectory remains strong, with climate tech growing from less than 3% of all private equity and venture capital investment in 2016 to over 10% today 2.

2️⃣ Industrial decarbonization remains critically underfunded despite high impact potential

Clean Grown Fund’s focus on industrial decarbonization addresses one of climate tech’s most significant funding gaps.