Clean Growth Fund: 10 Key Things You Must Know

Overview

The Clean Growth Fund (CGF) is a pioneering venture capital fund based in London, dedicated to supporting early-stage clean technology companies across the United Kingdom. Founded in 2020, the fund is a vital player in the UK’s mission toward net zero emissions by accelerating the development and commercialization of innovative technologies aimed at reducing greenhouse gas emissions. Focusing on sectors such as energy, transport, buildings, and the circular economy, CGF not only fuels the growth of new green businesses but also plays a crucial role in driving sustainable economic recovery and job creation. This article uncovers 10 insightful aspects of CGF, bringing to light why it has become a trusted name in climate innovation investment.

1. Origins and Mission of the Clean Growth Fund

The Clean Growth Fund was established in 2020 as part of the UK government’s broader Net Zero Innovation Portfolio. Its creation was motivated by the urgent need for early-stage funding targeting clean technologies with significant carbon reduction potential. Managed by Clean Growth Investment Management LLP, CGF is a £101 million venture capital fund focused on delivering commercial returns while reducing greenhouse gas emissions. It aims to support homegrown innovations that drive the UK’s net zero efforts by 2050, fostering new jobs and bolstering the country’s green economy.

2. Investment Focus and Target Sectors

CGF concentrates its investments primarily on Seed to Series A funding rounds, typically deploying initial investments of £500,000 to £3 million, with potential for higher follow-on support. The fund targets companies that develop solutions across six core sectors: power and energy systems, transport and mobility, industrial decarbonisation, buildings and the built environment, agrifood and land use, and the circular economy including waste and water management. These sectors are critical for reducing the UK's carbon footprint across major emission sources.

3. Track Record and Portfolio Highlights

Since inception, CGF has invested in 19 innovative startups projected to collectively reduce more than 55 million tonnes of CO2 equivalent emissions by 2030. Notable portfolio companies include Sunswap, which manufactures zero-emission transport refrigeration units serving clients like Tesco and DFDS; Rendesco, specializing in low-carbon ground-source heat networks with a multimillion-pound project pipeline; and Above, a solar infrastructure optimization firm using AI and robotics that has achieved a remarkable 50% revenue compound annual growth rate since 2021.

4. Fundraising Success and Growth Plans

Building on the success of its first fund, CGF launched its second fund aiming for a total target of £150 million (about €174 million). Its initial close in 2025 attracted £49 million from returning investors like the Strathclyde Pension Fund, alongside new institutional backers such as Islington and East Riding LGPS. This capital injection underscores strong investor confidence in CGF’s model, enabling it to expand its reach across UK innovation hubs and continue powering early-stage climate tech enterprises.

5. The Role of Institutional Investors and Pension Funds

The involvement of large pension funds, including Strathclyde Pension Fund, highlights a growing trend of aligning long-term investments with sustainable outcomes. These investors recognize the potential for robust financial returns alongside significant environmental impact. CGF’s disciplined investment strategy and expert team have been key to securing this institutional backing, which is critical for scaling clean technologies and fulfilling government climate targets.

6. Supporting Startups Beyond Capital

CGF goes beyond funding by providing portfolio companies with strategic guidance and access to expertise. It benefits from close collaboration with Carbon Limiting Technologies (CLT), the UK’s longest-established early-stage incubator for low-carbon companies. This support ecosystem helps startups navigate operational, technical, and market challenges, improving their chances of successful scaling and commercialization.

7. Focus on Measurable Climate Impact

A hallmark of CGF’s approach is its rigorous emphasis on quantifiable emissions reductions. Every investment is assessed for its potential to deliver significant greenhouse gas abatement, ensuring that financial returns are intrinsically linked to positive environmental outcomes. This impact-driven investment philosophy supports the UK’s net zero ambitions and reassures investors that their contributions translate into tangible climate benefits.

8. Certified B Corporation Status

The Clean Growth Fund is a certified B Corp, boasting one of the highest scores among UK venture capital firms. This certification reflects CGF’s commitment to high standards of social and environmental performance, accountability, and transparency. It reinforces the fund’s mission to not only generate profits but also contribute meaningfully to sustainable development and responsible business practices.

9. Notable Investments in Emerging Technologies

CGF has backed emerging technologies with game-changing potential, such as measurable.energy, which utilizes AI-powered smart plug sockets to reduce electricity wastage and carbon emissions in office buildings by up to 50%. Another example is Clean Food Group, a food-tech startup producing sustainable oils and fats alternatives, helping to reduce the global food system’s significant greenhouse gas emissions and deforestation footprint.

10. Challenges and Future Prospects

Despite CGF’s growing success, the fund operates within a challenging context of fluctuating climate policies and global economic uncertainties, which affect funding availability and risk appetite. Nevertheless, CGF remains optimistic about the UK’s vibrant climate innovation ecosystem. The fund plans to increase investments, explore new technologies, and deepen partnerships across regional innovation clusters. With continued investor support and government alignment, CGF is well-positioned to drive the next wave of clean growth technologies during this critical decade.

Conclusion

The Clean Growth Fund is a vital catalyst for the UK’s transition towards a net zero future, marrying financial discipline with impactful climate action. Through strategic investments across key clean tech sectors, robust support for startups, and a commitment to measurable environmental benefits, CGF exemplifies how venture capital can power sustainable economic growth. As the UK strives to meet ambitious climate targets, the role of initiatives like CGF will only become more crucial. Observing its evolution invites reflection on the power of innovation and capital working hand-in-hand to combat climate change.