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July 14, 2023

Tapping into UK innovation

HG Ventures’, Jon Schalliol outlines an important initiative that creates connections with some of the UK’s leading climate tech innovators.

The United Kingdom has a thriving climate tech startup ecosystem, with a significant number of companies dedicated to developing innovative solutions for addressing climate change. UK startups working in this field attracted more than $7.5B in venture capital funding in 2022, and we have been investing in sustainability-oriented companies since our inception.

In 2019 we made our first investment in London-based Puraffinity, a company that is developing innovative solutions to the global problem of PFAS in water. In 2021 we invested in Belfast-based Material Evolution, a company dedicated to developing a low-carbon alternative to traditional traditional cement. The company just closed a £15 MM investment round, in which we were pleased to invest as our third round with the company.

That same year, 2021, we partnered for the first time with Innovate UK, to invest in UK startups that can reduce energy and resource use, or otherwise drive sustainable innovation as part of Innovate UK’s Transforming Foundation Industries Investor Partnership Programme. Innovate UK is part of United Kingdom Research and Innovation, which directs research and innovation funding for the UK government, and startups funded by investor partners like us can access grants to fund relevant efforts. This enabled Puraffinity to tap into a £1.5 MM grant as a part of an additional funding round we led into the company, which really turned the corner in its industrial applications.

With the Transforming Foundation Industries program completed, we are grateful Innovate UK selected us for the new Future Economy Investor Partnership Programme.

Important areas of focus

I am particularly excited to be part of this initiative for three reasons:

Firstly, Innovate UK is this year placing an emphasis on areas that are of great interest to HG Ventures, namely: Net Zero; Healthy Living and Agriculture; Digital and Technologies; Equality, Diversity and Inclusion. We continue to invest in many of these fields, and while we talk a lot about Hard Tech, we invest at the intersection of these technologies wherever we can add meaningful value to our portfolio companies.

Secondly, the UK remains a hotbed of innovation. Companies headquartered there are working in a wide range of areas, including renewable energy, energy efficiency, carbon capture and storage, sustainable transportation, the circular economy, and energy. The UK offers a supportive environment for climate tech startups, including accelerator programs and government initiatives and grants, like Innovate UK’s Investor Partnership Programme. These resources all help to foster innovation and accelerate the growth of startups, and UK entrepreneurs in these areas often see opportunities where those in other markets do not.

Thirdly, Innovate UK has been a fantastic partner to work with. It afforded us the trust to be the only investor in North America in the initial Transforming Foundation Industries Investor Partnership Programme, and the entire team is working hard to improve the chances for the success of startups – while minimizing red tape many may equate with government efforts. We are proud to help them drive progress.

I am optimistic that through our relationship with Innovate UK and the Investor Partnership Programme we will uncover more inspiring UK founders in whom we will want to invest. Many of those companies will also be able to tap into these grants from the government to move the company, industry, and UK economy forward.