20 Jul 2016 How to overcome the low-carbon funding challenge?

Over the past decade, Shell Springboard and Shell LiveWIRE have supported more than 100 low-carbon, cleantech and sustainability companies. From hybrid engines and biofuels, to carbon capture, their innovations are pushing the boundaries of creativity and science.

Both of these flagship enterprise development programmes offer businesses early-stage grants to help them gain a vital foothold on the funding ladder. But, for most businesses this is just the start of their financial journey.

Our research has found that access to funding is a particular challenge for low-carbon enterprises in the UK. This, in turn, makes it hard for companies to commercialise their innovations and bring them to market.

To better understand how the UK can create a robust scale-up ecosystem for low-carbon start-ups, Shell and the Financial Times organised a debate with some of the leading experts in the sector. We asked whether low-carbon investors in the UK are more risk-averse than some of their foreign counterparts, and how can the complexity of the low-carbon financial landscape be reduced.

These questions generated a thought-provoking discussion – which you can review here. Key insights included:

  • U.S. low-carbon investors more willing to take risks
    There was broad consensus that the UK has a smaller pool of venture capital funders than the U.S. Several speakers noted that for low-carbon projects, it was easier to be backed by U.S. investors, as UK investors are typically more risk-averse.
  • Green Investment Bank: more risk, less complexity
    There was some disagreement over whether the Green Investment Bank takes on the appropriate amount of risk in light of its mandate. Some participants suggested that the structure of the Bank was too complex for many entrepreneurs.
  • Sector is sensitive to regulation
    Although there was disagreement on the precise impact of recent government regulations in the low-carbon sector, participants recognised that regulation and government policy play an important role in shaping investment attitudes.

What’s next?

To help entrepreneurs navigate the finance ecosystem, Shell Springboard has developed a digital interactive map, segmenting and profiling some of the key financing sources in the UK. This Access to Finance Navigator, launched at Shell Make the Future London, will help entrepreneurs identify funding options based on their investment requirements, sector and development stage.