The global push for net-zero emissions is facing a staggering funding shortfall, particularly for climate tech innovations designed to cut carbon emissions. While software solutions often attract the lion’s share of venture capital, hardware technologies — crucial for deep decarbonisation — remain grossly underfunded. This gap has left groundbreaking clean energy startups struggling to scale.
At COP27, global leaders highlighted the need for $4 trillion in annual investments to hit net-zero targets by 2050. Yet, current funding efforts meet just 16% of this demand. To help change that, UK-based Elbow Beach Capital has launched its second investment fund, pledging £80 million to supercharge early-stage businesses driving climate impact.
The Climate Impact Fund 2 is tailored to support British startups creating cutting-edge decarbonisation and sustainable energy solutions. Backed by £63 million in initial commitments — including up to £50 million from the British Business Bank’s Enterprise Capital Funds programme — the fund directly targets the industry’s “missing middle” where funding is most scarce.
Backing the Next Wave of Climate Innovators
With £40 million already available for deployment, Elbow Beach is setting its sights on supporting up to 36 emerging startups over the next four years. These businesses will gain crucial backing to accelerate growth, refine their technologies, and expand internationally.
The fund’s investment focus is sharp — zeroing in on automation, artificial intelligence, carbon capture, electrification, and low-carbon materials. By targeting these areas, Elbow Beach aims to fund technologies that not only tackle climate change but also improve efficiency and drive down costs for industries transitioning to greener operations.
Founded in 2021 by Nick Charman, Jonathan Pollock, and Thomas Hardy, Elbow Beach Capital stems from a deep-rooted concern for the planet. The name reflects the founders’ shared experience visiting Bermuda’s Elbow Beach, where they saw firsthand the threat rising sea levels pose to island nations. This moment galvanized their mission — to channel capital into technologies that protect ecosystems while creating commercial value.
“The UK is a global leader in climate tech, second only to the US,” explained Jon Pollock, CEO and Managing Partner at Elbow Beach. “Yet, British startups receive less than half the funding their American peers secure. Our mission is to close that gap and ensure Britain stays at the forefront of climate innovation.”
Pollock stressed that while green technology is essential, it must also deliver commercially viable solutions. “It’s not enough to be sustainable — these technologies must outperform what’s already out there. Our role is to back founders who can deliver impact at scale, offering better and more cost-effective solutions to global challenges.”
Fueling Purpose-Driven Growth
Elbow Beach provides early-stage capital ranging from £500,000 to £1.5 million per business, supporting entrepreneurs committed to solving environmental and social challenges. Beyond funding, the team offers hands-on guidance, helping startups align their innovations with market demand and commercial success.
Pollock added, “Our new fund sits at the intersection of efficiency and climate impact. We’re interested in companies tackling big customer problems — from cutting household energy consumption in products like vacuum cleaners to using robotics and AI to boost crop yields. Ultimately, we’re looking for scalable solutions that drive both profit and planet-positive outcomes.”
This isn’t Elbow Beach’s first foray into climate investing. Its initial £20 million fund backed several promising startups, including Munro Vehicles, a Scottish firm building electric 4x4s for heavy industry, and Anaphite, a Bristol-based startup enhancing battery technology for electric vehicles. Another portfolio highlight is WASE, which transforms wastewater into energy, offering a practical solution for sustainable power generation.
The firm’s commitment to impact doesn’t stop at investments. Through the Elbow Beach Foundation, they donate £25,000 annually to two social or environmental projects while also pledging 1% of annual net profits to the foundation. This approach underlines their belief that lasting impact requires action both inside and outside of their core business.
British Business Bank’s support signals a strong vote of confidence in the fund’s potential to catalyse climate tech growth. Christine Hockley, Managing Director and Co-Head of Funds, commented, “We’re proud to back Elbow Beach as they fund pioneering technologies addressing the climate crisis. Our Enterprise Capital Funds programme helps ensure that early-stage founders in the UK have access to the venture capital needed to build impactful businesses.”
As the UK’s climate tech sector continues to grow, Elbow Beach’s latest fund promises to be a powerful catalyst — helping local startups turn bold ideas into global solutions for a greener future.
