By Charlie Conchie
Venture capital investors are turning their gaze towards the UK’s so-called cleantech sector this year as net zero targets move closer, analysts from KPMG have predicted.
Last year, global venture investment slumped by almost a third last year as soaring inflation and sharp rate hikes caused investors to turn off the taps following a funding frenzy in 2021.
But analysts at the Big Four firm are predicting that cleantech and alternative energy firms could be set to rake in fresh funding this year as investors look to capitalise on Europe’s rush to shore up energy supplies, after Russia’s invasion of Ukraine cut off a steady flow of gas and oil to the bloc.
“The growing pressure on the need to move to low carbon energy sources has really accelerated interest by investors in the alternative energy sector, which is growing in the UK,” Gavin Quantock, Head of energy M&A at KPMG, told City A.M.
Quantock said that as net zero targets move closer, investors were willing to pump cash into firms that look like they can achieve “significant, at-pace scale”.
In a report published today, KPMG predicted that so-called ‘dry powder’ raised prior to the downturn was likely to be channelled into the cleantech and green energy firms in the year ahead.
However, the optimistic outlook from KPMG comes despite funding into the green tech sector tumbling across Europe last year amid the wider market slump, separate figures from Pitchbook shared exclusively with City A.M. showed today.
Funding into green technology across Europe fell 18 per cent to $12.5bn, down from a bumper year in 2021 where $15.3bn was pumped into the market, the data showed.
The downturn in investment last year sparked calls from tech firms and campaigners for tweaks to government policy to help ease the flow of capital into cleantech and climate tech.
Lobby group Coadec, as well as a host of other fintech firms, wrote to ministers in December outlining a list of measures to boost investment in cleantech, including loosening restrictive pension fund rules.
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