12 September, 2011 - 08:41 By Tony Quested

Funding CleanTech innovation

There’s a hole in the ozone layer. Pollution is killing the planet. We need cleaner, greener energy and it has to be paid for.

While the taxpayer will undoubtedly pay through the nose for the renewable energy of the future delivered to their homes and businesses, who will fund the core innovation underpinning the revolution?

Most of the wind currently being generated in the UK is emanating from government think tanks and localised talking shops. It’s time that action overtook analysis in the renewable energy debate. The advent of the Green Investment Bank won’t prove anything like a solution in my view.

When Cambridge CleanTech pioneer Michael Evans pitched for a modest £1.1m funding for his Cambridge company Green-Tide Turbines, VCs told him the venture was too far away from commercialisation and therefore too risky to fund.

Evans had the audacity to counter with: ‘What about biotech? Most drug discovery is 15 years in the clinic with no certainty of delivery to market, yet bio continues to raise billions globally.’ He didn’t get a coherent answer.

The Cambridge biotech cluster has produced one blockbuster drug in its 27-year history – Cambridge Antibody’s Humira. For all the Nobel Prizes and the undoubted brilliance of Cambridge’s life science brainpower that’s a poor return on the billions of pounds of investment that has been showered on researchers locally.

CAT’s commercial triumph persuaded AstraZeneca to acquire the Cambridge company and morph it into MedImmune. But the core question remains relevant – why back bio so heavily and treat CleanTech so shabbily?

We know the BioMedTech cluster in Cambridge is vital to the delivery of better medicines in future and any research that helps facilitate faster delivery of safer drugs has to be encouraged in the lab.

In the lab! That is exactly the point: We can accept that drug discovery starts in the lab and needs cash from the initial phase of discovery. Why then starve CleanTech innovators of funding?

There is clearly a market for backing CleanTech plays, otherwise Cambridge company Enecsys wouldn’t have clinched $41m funding in early May – but that haul was in splendid isolation.

Knowing Michael Evans and GTT’s technology – tidal stream turbine technology that produces energy faster and in a greener manner – without disturbing aquatic wildlife – than any I have seen in this segment I know the concept has been properly explained.

More to the point, the Brazilian government, and other potential clients in Latin America and globally, have already warmed to the technology which was hailed as “Britain’s most promising start-up” by Lord Green, the Minister of State for Trade and Investment on a Brazil trade mission recently.

Clearly for VCs to get excited and to start investing in volume there needs to be a big exit in the sector – common in the US but unheard of in the UK. But for there ever to be a big exit, there first needs to be a big entry from investors. That would create momentum. That would create CleanTech heroes.

Dr Nicky Dee, from the IfM in Cambridge, and colleagues have been contributing to a superb piece of research on a broader topic of funding emerging industries. Her findings will be fed into a groundbreaking report steered by the University of Cambridge anytime now.

Her team evidenced a track record for CleanTech investment in the US but not in the UK. It backed up the belief that VCs tend to track serial entrepreneurs and if there are none in CleanTech – only first-time entrepreneurs – then funding will be hard to leverage. VCs will tap into a market but where a market needs to be created – well that’s another ball game entirely.

Her team has gathered some eye-opening figures that will make the report a must-read and will beg follow-up action.

In the meantime, Business Weekly is supporting a private round-table under Chatham House rules bringing leading academics, entrepreneurs with the ear of Government and potential funders into the debate to develop a strategic campaign that will change the dynamic currently militating against funding for CleanTech innovation.

From this a White Paper will be produced to form a living, breathing discussion document that will act as a template for meaningful action.

If we want to institute a truly sustainable, environmentally responsible energy policy in the UK its time we backed our ‘green’ innovators with moral and financial support and set out a deliverable agenda.

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