Cleantech for UK has stated that venture capital investment in UK cleantech remains a “standout performer”.

In its latest report, Charting the Progress, the coalition of accelerators, venture capital (VC), growth investors and alternative asset platforms, sees the current level of UK cleantech investment as buoyant, despite the turbulence of the global economy in the last year, with inflation pressures, rising interest rates and large geopolitical shocks all causing uncertainty in the financial markets.

Despite this, it says, the UK economy proved more resilient than anticipated, and venture capital investment into UK cleantech in 2023 matched 2021 levels of investment, attracting £2.6bn.

Although 2023 saw a decrease in the number of late-stage deals compared to 2022, it still surpassed the number of deals observed in 2021, and early-stage activity remained notably higher than late-stage activity.

The report also bears witness to a noticeable trend away from traditional VC funding, towards angel investors, impact investors, and crowdfunding. This shift highlights both the challenges faced and the maturation of the cleantech capital stack in the UK.

Compared to the US, where VC investment experienced a sharp decline of 45 per cent from 2022 to 2023, and may raise questions about the efficacy of the US’s landmark legislation, the Inflation Reduction Act (IRA), the UK continues to invest in development over manufacturing.

VC investment into Asia Pacific cleantech, however, increased significantly compared with 2022, largely driven by significant activity in Chinese solar and battery manufacturing and innovation.

EU investment was also strong. France, with a population of 64.7 million received the most VC investment in 2023 (£2.8bn) and thus roughly equal to the UK. Germany, with the larger population received £2.2bn, trailing France and the UK.

Despite having the smallest population size of the countries compared (38.7 million). Investment in Canadian cleantech reached £1.9bn.

However, when considering these figures by per capita, Canada is the top spender, followed by the US and then the UK.

By sector, energy and power sector received just over £1bn of investment in 2023, compared to £0.68 billion in 2022. This is principally due to another large investment of £705m for Octopus Energy (who also had two big deals in 2022). Energy and Power was the only sector which saw an increase in investment compared to the previous year, all other sectors saw

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