I have been building and investing into start-ups most of my working life and over that 30+ years, we've seen economic cycles and no shortage of business trends.
The fundamental demands of running a start-up haven't changed in that time either: balancing your family life; cash-flow demands; looking after your team; and being an entrepreneur can equally be the most rewarding and lonely place to be.
But never has the ecosystem for start-ups looked as positive. And with the COP26 United Nations Climate Summit on the horizon, a primary aim for governments and businesses is to harness the power of innovative sustainable start-ups to help them deliver on their goals.
UK SMEs, with scalable solutions to climate change, are uniquely positioned to attract significant investment.
Here are my ten reasons why we are investing in innovative teams and helping them build high-growth companies focused on sustainability outcomes.
Government support
In his Budget, Chancellor Rishi Sunak set out a new £375m UK-wide Future Fund: Breakthrough - investing in highly innovative companies which are aiming to raise at least £20m of funding.
The Government has also set out major reforms to boost entrepreneurship: first, to the immigration system to help UK businesses attract international talent; second, by looking to relax the London Stock Exchange listing rules and to encourage more IPOs.
Consumer demand
Sustainable business ventures are ripe for opportunity. Younger generations now expect brand sustainability and transparency, perhaps even more so in light of the pandemic - they seek out ethical, local and sustainable products.
Circular economy
Start-ups that focus on traceability, reverse logistics schemes and waste mining all have significant disruptive potential. A variety of approaches to phasing out single-use plastics have begun (it is now illegal to sell or stock single use straws, stirrers and cotton buds).
These bans set the stage for new approaches to other areas of recycling. For instance, the EU is planning an eco-design law, guaranteeing the right to repair electronics and phasing out disposable packaging by 2030.
Tax credits and grants
Businesses developing clean technologies can access R&D tax credits to get beyond the development and prototyping phases. Start-ups need to demonstrate how their business provides measurable improvements linked to key targets, such as achieving carbon neutrality by 2050, reducing water consumption by 50%, and reducing waste by 75%.
Meanwhile, Innovate UK's increasing number of grants are helping sustainability start-ups fund opportunities of strategic, technical importance to the UK - such as the recent £134m grant to help companies build back better.
Preferential bank terms
Banks and financiers are scrutinising a business' ESG credentials. If you are a start-up and are sustainable, you stand the chance of negotiating preferential terms.
Financial services
The stakes of climate change and its environmental risk have caught the attention of financial institutions, signalling a turning point for investors. The Bank of England is set to launch climate stress tests on UK banks and insurers to assess risk, while financial services providers increasingly prioritise businesses with sustainable products.
Electrical vehicles (EV)
For start-ups in the EV space, major action is also underway to phase out the use of new internal combustion engines, starting with passenger vehicles in Europe, the UK and North America.
These laws indicate a strong need for EV charging infrastructure, as well as research and development in alternative hydrogen and ammonia fuels to develop solutions to clean shipping and air transport.
Sustainability recognition
Businesses are vying to get recognition for their sustainability efforts. Lists such as the Corporate Knights global 100 ranking, the RE100 for businesses supplying their operations with 100% renewables, the Ellen MacArthur Foundation's CE100, and Climate Action 100+ are all spurring action.
Partnerships and accelerators
It is a great time for investors to tap into sustainable start-ups, which is why the number of start-up accelerators is on the rise. TechNation's Net Zero, Bethnal Green Venture's Tech for Good and the Sustainable Accelerator are all examples of UK-based sustainability accelerators.
Meanwhile, large corporates are partnering with start-ups. Unilever recently announced its "Clean Future" programme, with €1bn in funding for start-ups working to eliminate carbon footprints and to boost recycled content of cleaning products by 2030.
Collaboration
The level of collaborative effort among private businesses, investment groups and the government towards finding climate solutions is unprecedented.
Scalable and measurable solutions are highly sought after by investors, while R&D credits can help start-ups to develop their ideas.
Innovators have the upper hand in light of the huge demand for viable climate change solutions.
Jasper Smith (pictured) is one of the founders and CEO at Vala Capital
Sustainable Investment Festival, 22-25 June
International Investment's parent company Incisive Media will host its inaugural Sustainable Investment Festival this summer, featuring keynote speakers, innovative breakout events and sessions including contributions from RL360, KBI Global Investors and deVere Group to help investors navigate this rapidly-evolving area of the market. Click here for more information.
