Clean Growth Fund Reaches £81.5 Million Second Close for Fund II

Clean Growth Fund has announced the second close of its Fund II vehicle, bringing total investor commitments to £81.5 million, more than halfway toward its £150 million target. The close was anchored by a £22.5 million commitment from Border to Coast's UK Opportunities Fund, a pension pool representing 18 Local Government Pension Scheme partner funds with combined assets of approximately £120 billion, alongside a further £10 million from Strathclyde Pension Fund, increasing its total Fund II commitment to £30 million.

 

Why UK Pension Fund Participation Signals a Shift in Institutional Climate Tech Investment

 

Local Government Pension Scheme funds, the pension arrangements for UK local authority employees, are typically characterised by conservative, long-term investment mandates prioritising stable, predictable returns to meet future pension obligations, rather than the higher-risk, higher-potential-return profile typically associated with early-stage venture investing in Seed to Series A companies. Border to Coast Portfolio Manager Keith Angood specifically framed the fund's participation around targeting "high-quality UK companies and assets that can deliver attractive returns whilst contributing to economic growth and development across the UK," language that positions this climate tech venture investment as consistent with, rather than a departure from, the pension pool's core mandate of generating long-term member value alongside broader UK economic contribution.

That framing matters because it suggests climate technology venture investing is increasingly being positioned and evaluated by conservative institutional capital as a legitimate long-term return-generating asset class in its own right, rather than purely as an impact-driven allocation separate from core financial return objectives. Clean Growth Fund founder Beverley Gower-Jones specifically noted this dynamic directly, stating "major institutional investors are looking to UK climate tech for exactly what it offers – strong long-term returns alongside real economic growth right across the country," and citing the UK's net zero economy as "growing more than three times faster than the economy as a whole" as the underlying growth opportunity driving this institutional interest.

 

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Why the Forest Absorption Comparison Provides a Meaningful Scale Reference

 

The release states Clean Growth Fund's first vehicle invested in 19 UK startups on track to abate 27 million tonnes of CO2 equivalent annually by 2030, a figure the release specifically describes as "equivalent to 1.5x the carbon absorbed by all UK forests." That comparison provides a genuinely useful scale reference for readers to contextualise an otherwise abstract emissions figure, translating a technical carbon abatement number into a comparison against the UK's entire forest carbon sink, a natural climate benchmark most readers would have some intuitive sense of, even without detailed knowledge of carbon accounting metrics specifically.

That comparison also implicitly highlights a broader point relevant to climate policy discussions more generally: technological decarbonisation solutions developed by companies like those in Clean Growth Fund's portfolio can, in aggregate, deliver climate benefits at a scale exceeding what natural carbon sequestration through forest cover alone provides, suggesting continued investment in emerging climate technology companies represents a genuinely significant lever for national-level emissions reduction, distinct from and additional to land-based conservation and reforestation efforts.

 

Why the Rendesco Exit Functions as a Credibility Signal for This Fundraise

 

The release specifically notes this second close follows Clean Growth Fund's successful exit from Rendesco in May 2026, now described as the UK's leading clean heat network developer, which subsequently secured £100 million in new investment from Pioneer Point Partners. That exit, and the substantial follow-on investment Rendesco attracted afterward, provides a concrete, verifiable demonstration that Clean Growth Fund's investment approach can successfully identify early-stage climate technology companies that go on to achieve significant scale and attract substantial follow-on capital from other investors.

For an early-stage venture fund seeking to raise a second, larger vehicle from cautious institutional investors like pension funds, having a genuine, realised successful exit to point to carries considerably more weight than portfolio companies still at an earlier, unproven stage of development, since it demonstrates the fund's investment thesis and portfolio company selection process can produce actual realised returns, not merely promising early-stage companies whose eventual outcomes remain uncertain.

 

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Why the Place-Based Investment Strategy Extends Beyond Traditional Innovation Hubs

 

The release notes Clean Growth Fund "champions a place-based investment strategy, backing climate innovation from the established science and investment centres of Oxford, Cambridge and London – to emerging hubs found in the regions right across the UK." Fund II's four investments to date, spanning Sheffield, Bristol, Cardiff and London across battery technology, food, heavy industry and buildings, reflect that broader geographic distribution beyond the traditionally dominant "Golden Triangle" of Oxford, Cambridge and London that has historically concentrated the bulk of UK venture capital investment.

That deliberate regional spread connects to the fund's stated emphasis on "creating good quality regional jobs and driving clean industrial growth" beyond London and the South East specifically, a framing that aligns with broader UK economic policy discourse around regional economic development and "levelling up" outside the capital, positioning Clean Growth Fund's investment thesis as serving both climate technology development and regional economic distribution objectives simultaneously, rather than concentrating investment purely in already well-resourced innovation clusters.

 

Source: Clean Growth Fund