Funding for Cleantech Companies

There are numerous start-up companies in London today, all with their own take on clean technologies and processes. Clean technology encompasses a wide range of industry sectors and is no longer a niche. Information technology, green transportation, renewable energy technologies and recycling are all well-established clean tech sectors, many of which are very well represented in London. However, there are new players coming into clean technology all the time in the UK's capital, many with highly innovative ideas that are designed to be rolled out to the wider economy and - sometimes - to a mass market. Of course, for many of these nascent businesses and start-ups attracting investment is the key to growth and the realisation of their products and services. Thankfully, the capital offers clean technology an attractive environment where many businesses are able to thrive with plenty of funding opportunities on offer. It is worth remembering that the clean technology business sector is a something of a success story, taken over the whole country, with the sector now employing more people than in telecommunications and that London is leading the way and exporting strongly.

Mentoring and Attracting Investment

One of the most important ways that clean tech companies can attract the funding they are after is via venture capital. This traditional source of funding for all sorts of start-ups - clean tech, or not - is not as easy as it might seem. Getting the attention of the all-important investor is the crucial thing, followed by a solid business proposition which tempts an investor to reach for their cheque book. However, as London's clean tech business clusters are keen to point out, by working together they are able to do the job of attracting investors in unison. This means holding joint events where private investors and investment fund managers are able to find out about a lot of new clean technology companies in one go.

Some businesses which have become established in their sector will offer mentoring services to others in order for them to obtain the same sort of funding. Indeed, mentoring of this sort within the capital's clean technology sector is sometimes provided free of charge. Some charitable organisations, such as Bathtub2boardroom, operate in London with the specific aim of joining up new businesses with investors in an accelerated way.

Grants for Clean Technology Businesses

Of course, successfully attracting external investment into a clean tech firm is one thing, but how do businesses survive whilst they are developing their ideas into genuine business propositions? After all, few start-ups can boast the sort of research and development budgets of already well-established companies. Apart from self-funding, there are grants that are available for many types of start-ups. In the clean technology sector, where many people have identified the potential for large growth, there are specific funding avenues which are available.

A typical example of the sort of grant that might be obtained by a new clean technology company is the Royal Bank of Scotland's Innovation Gateway. Under the funding scheme, businesses can obtain up to £3,000 in development grants. The principle of the scheme is that it will encourage greater efficiency in offices, including the bank's own. Climate-KIC is another grant awarding body that is Europe's largest public-private innovation partnership. It is based in Kensington and focuses on fostering new products and process that will help in the combat against climate change. According to the group, up to 95,000 Euros can be obtained in grants that are tiered in three separate stages, allowing small businesses to grow. Businesses must be under a year old before they initially apply.

The Role of Government

According to the Green Alliance, a charity and politically independent think tank, the innovation end of the clean tech sector is still under-funded and the government can do more to encourage growth in this area. They call for the existing government institutions, such as the Technology Strategy Board, the Energy Technology Institute and the Carbon Trust to receive ring-fenced funding over the course of the next 10 years to allow them to adopt longer term strategies in support of new companies and innovators. They point out that about 70 per cent of the £1bn research and development tax credits which are allowed under the UK's rules end up going to large companies. This, they suggest, means much of it goes to multinational companies which would be undertaking research regardless.

Instead, they call for a switch in the regulations to favour a greater proportion of the funding from tax credits going to early-stage clean technology firms which would undoubtedly be of benefit to smaller business and - they argue - be a better use of public money. Nevertheless, the government is undoubtedly backing clean tech innovation, even if it can always be called upon to do more. Only in 2013 was it announced, for example, that the Department of Energy and Climate Change would launch the second phase of the Energy Entrepreneurs Fund, which followed £16m of funding awarded during the first phase of the scheme.