A $2 trillion funding gap exists for next-generation climate tech, especially in hardware that reduces CO₂ emissions, as traditional venture capital favours scalable technologies like software. COP27 indicated that achieving global net-zero emissions by 2050 demands $4 trillion in annual investments in renewables and decarbonisation solutions by 2030, yet only 16% of these needs are met. To combat this, Elbow Beach Capital is offering £20 million for early-stage businesses (pre-seed to Series A) developing innovative decarbonisation and sustainable energy technologies impact.
Elbow Beach, a leading UK specialist climate impact seed investor, has announced its second fund’s launch and first close. The £80M Climate Impact Fund 2 has secured £63M in commitments, including up to £50M from the British Business Bank through its Enterprise Capital Funds programme. This fund addresses the crucial “missing middle” financing stage, where early-stage, post-venture climate technology companies need support to scale up and commercialise their technologies.
With £40m ready to deploy, Elbow Beach has activated the fund to support up to 36 early-stage British startups over the next four years, accelerating their growth, development, and export potential.
The fund aims to back technologies that create meaningful impact by solving significant challenges. Its investment strategy focuses on automation and AI, carbon capture, electrification, and low-carbon materials, enabling industries to increase efficiency and cost-effectiveness while transitioning to low-carbon operations.
Behind Elbow Beach: backing British technologies
Elbow Beach Capital was founded in 2021 by Nick Charman, Jonathan Pollock, and Thomas Hardy. The founders united through their shared concern about climate change’s impact on ecosystems and economies, believing in the need for early-stage capital to support environmental innovation. The company’s name comes from Elbow Beach in Bermuda, where the founders witnessed the vulnerability of small islands to climate change firsthand.
“The UK is second only to the US in climate technology startups, yet British businesses attract less than half the funding of their American counterparts. Elbow Beach aims to bridge that equity gap and ensure Britain remains a global leader in climate technology innovation.
“Being green isn’t enough — technology must make commercial sense. We’ll nurture the next generation of founders who drive real transformation and can provide customers with better, more cost-effective solutions at scale,” commented Jon Pollock, Elbow Beach CEO and Managing Partner.
The company invests in early-stage businesses developing technologies that tackle major environmental and social challenges while pursuing commercial growth. Its mission is to create lasting value by accelerating the adoption of decarbonisation, sustainable energy, and social impact solutions, ensuring that every investment protects the planet, its inhabitants, and ecosystems.
They provide £0.5 million to £1.5 million in long-term growth capital to support purpose-driven entrepreneurs who seek scalable solutions to environmental and social challenges while targeting commercial viability and growth potential.
Pollock added: “Elbow Beach’s new fund targets the intersection of efficiency gains and climate impact. Growth unites financial returns and impact. Our strategy matches technology with significant customer problems and steers companies toward their end markets. We’re exploring investments in technology that halve energy use for household products like vacuums and dishwashers and improve crop yields through robotics and AI.”
Portfolio highlights, from EVs to clean energy
Since 2021, Elbow Beach has supported early-stage technology companies from pre-seed through Series A and scaleup, using models designed to help startups progress and unlock their potential.
Its first £20M fund-backed companies include Munro Vehicles, a Scottish-based manufacturer of all-electric utility vehicles for heavy industry; Anaphite, a Bristol-based chemical engineering firm making energy-efficient EV batteries; and Bristol-based WASE, which converts wastewater into energy.
Beyond investments, Elbow Beach Capital shows its commitment through the Elbow Beach Foundation, which selects two projects or organisations advancing positive social or environmental change and donates £25,000 to each annually. The company also pledges 1% of its annual net profits to the Foundation, reinforcing its dedication to creating meaningful environmental and social impact beyond financial returns.
Christine Hockley, Managing Director and Co-Head of Funds at British Business Bank said: “We are pleased to support Elbow Beach as they back startups pioneering technology solutions to global climate challenges. Our Enterprise Capital Funds programme is essential in developing and maintaining effective venture capital provision in the UK, lowering barriers to entry for emerging fund managers. Our commitment to Elbow Beach builds on the programme’s track record and will help early-stage Founders in the climate impact sector across the UK to build their businesses.”
The post Elbow Beach launches £80M fund to bridge UK’s climate tech funding gap appeared first on Tech Funding News.