Clean Growth Fund II Nears £150M Target for Climate Tech

The Clean Growth Fund has significantly advanced its fundraising efforts for its second vehicle, Clean Growth Fund II, announcing a second close that has secured £81.5 million. This milestone brings the fund substantially closer to its ambitious £150 million objective, underscoring robust investor confidence in the UK's climate technology sector.

Anchoring this latest round was a substantial £22.5 million commitment from Border to Coast Pensions Partnership's UK Opportunities Fund. Launched in 2024, this fund is specifically designed to channel capital into UK-based companies and assets, aiming for sustained long-term returns for its Local Government Pension Scheme (LGPS) Partner Funds. The strategic alignment with domestic growth and innovation is a key driver for such allocations.

Further bolstering the fund's capital base, the Strathclyde Pension Fund, a returning investor since the first fund, injected an additional £10 million. This brings their total investment in Fund II to an impressive £30 million, demonstrating a deep commitment to the fund's mission. Other notable institutional backers participating in this close include the Islington Pension Fund and the East Riding Pension Fund, collectively reinforcing the fund's growing appeal across public sector pension schemes.

Clean Growth Fund II is strategically focused on identifying and nurturing early-stage companies, from seed to Series A, that are developing technologies critical for reducing carbon emissions and facilitating the UK's transition to a net-zero economy. The fund anticipates building a diversified portfolio of approximately 25 innovative businesses. To date, it has already deployed capital into four promising startups across key sectors such as battery technology, food innovation, heavy industry decarbonization, and sustainable building solutions, spanning locations from Sheffield to London.

Beverley Gower-Jones OBE, founder and managing partner of the Clean Growth Fund, highlighted the significance of crossing the halfway mark towards their target. She emphasized the fund's core purpose: to bridge British institutional capital with domestic innovation, where financial returns and positive environmental impact are intrinsically linked. This sentiment was echoed by Keith Angood, portfolio manager at Border to Coast Pensions Partnership, who noted the strong alignment with their objectives for long-term value creation and support for UK enterprise within a rapidly expanding market segment.

The UK's climate tech sector is experiencing significant growth, driven by government net-zero targets and increasing corporate sustainability mandates. This environment presents a fertile ground for venture capital, with funds like Clean Growth Fund II playing a crucial role in de-risking and scaling innovative solutions. The fund's place-based investment strategy, which targets both established tech hubs and emerging innovation centers across the UK, further enhances its ability to capture diverse opportunities.

This successful second close follows a notable exit for the Clean Growth Fund earlier in May 2026, when clean heat network developer Rendesco secured substantial new investment. Such successful exits are vital for demonstrating the viability and attractiveness of the climate tech asset class to institutional investors, paving the way for future capital deployment and continued innovation in the sector.