‘Net zero economy making waves’: insights from IVGF

The UK’s climate technology ecosystem is emerging as a powerful driver of economic growth and a compelling investment opportunity, according to speakers at Longview Network’s Institutional Venture and Growth Forum last week.

Beverly Gower-Jones, founder and managing partner of the Clean Growth Fund, and Zoe Reich, founding partner of Octopus Energy Climate Ventures, highlighted both the macroeconomic tailwinds and the deep-tech opportunities attracting venture capital into the sector.

Gower-Jones painted a picture of a net-zero economy already delivering measurable returns for the UK. She noted that in 2024 the country was home to 23,000 net-zero businesses, 94% of which were SMEs. Collectively, they added £83 billion in gross value to the economy, supporting nearly 951,000 jobs, or 2.9% of UK employment.

Importantly, she said these roles are not only growing in number but outperforming in quality: wages are 15% higher than the national average, while productivity is 40% stronger.

“They’re not just jobs, they’re great jobs,” she said, adding that the sector now accounts for 3.3% of total UK GVA. “Every £1 of direct GVA supports an additional £1.89 in the wider economy, which is a huge foundation and bedrock for future growth.”

Gower-Jones also emphasised the sector’s breadth. Unlike industries that cluster in London or other major cities, the net-zero economy is “making waves across the entire UK”. The momentum, she said, is being driven by two key transitions: renewable energy deployment and rapid adoption of electric vehicles, which now account for 27% of the car market.

These shifts, she argued, create opportunities well beyond energy and transport. “The sustainable transition impacts the whole economy – across industry, buildings, agriculture and waste – with all the commercial opportunity that brings.”

From an investment perspective, Gower-Jones stressed that climate tech has moved beyond being a niche ESG play. “Climate tech not just an ethical choice but a smart business strategy,” she said. “Accelerating climate tech adoption is a mainstream business and investment thesis. The financial and strategic drivers reinforce the case that climate action is rooted not just in obligation, but [offers] opportunity, resilience and leadership.”

She pointed to the UK’s maturing venture ecosystem, underpinned by 2,500 start-ups active in areas such as energy, mobility, materials and industrial decarbonisation. Public funding has provided a strong platform: Innovate UK alone has deployed over £1 billion in grants, leveraged into £4.5 billion of private investment in 2024. “That’s a really good use of public money, which signals increased investor confidence,” Gower-Jones said.

The UK’s universities also provide a competitive advantage, generating intellectual property and spin-outs in synthetic biology, hydrogen, next-generation renewables and carbon capture. Together, these elements position UK climate tech as “a compelling and maturing VC opportunity”.

Commercial proposition

If Gower-Jones underscored the macroeconomic and policy-driven backdrop, Reich focused on the commercial realities of scaling new technologies. For her, the energy transition is “very much a commercial proposition, rather than one delivered by policy”.

She argued that the sector is attractive not only for its environmental impact but for its ability to deliver strong financial returns and resilience. “The more we transition to renewables, the more we save ourselves from shocks like the Russia-Ukraine conflict,” she said.

Reich emphasised that venture capital has a critical role in advancing enabling technologies across the energy stack – from customer-facing platforms to AI-driven optimisation and physics-level breakthroughs. “The joy of deep tech is that it’s often enabling technology that can be applied to one market and then into others as well,” she explained.

She cited novel battery materials as an example, which may start in EVs and move through large application until it reaches AI hyper-scalers and grid-scale storage. “That’s where you get significant value creation,” she added.

Reich also pointed to the aggregation potential emerging in markets such as EV software. Around 20 European firms now generate more than £10 million in recurring annual revenue, creating opportunities as they expand from domestic to cross-border solutions.

To capitalise on this growth trajectory, Octopus Energy Climate Ventures was set up as an evergreen fund, enabling it to support companies through multiple stages of scaling. “That’s a particularly interesting play in the European market,” Reich said.

However, she also warned of challenges in the UK venture landscape. Around 45% of climate technologies are at the “pre-scaling” stage – proven products that need international expansion or secondary product development funding. Yet UK investors have often struggled to capture the upside.

“Octopus Energy itself could only get a very small amount of seed funding from the UK. All its growth – a spin-out valued at approximately £10 billion – is not going back to UK investors,” Reich said. “The strategy I run has been set up to back the companies we think are going to be the next Octopus Energy.”