With the Clean Growth Fund’s second vehicle securing £49m at first close, managing partner Beverley Gower-Jones discusses investor appetite, the challenges of pooling, and the case for climate venture capital
The second funding round for the Clean Growth Fund, a UK climate-focused venture capital investor, has been backed by a group of LGPS funds and an endowment.
This includes a £30m commitment from existing investor Strathclyde Pension Fund (up from £20m in the first fund), £12.5m from East Riding, and £15m from Islington Pension Fund, alongside a cornerstone contribution from Queen’s College, Cambridge.
The fund still aims to raise a further £50m–£100m this year, with Strathclyde offering to increase its investment by an additional £10m once the £70m milestone has been reached, according to managing partner Beverley Gower-Jones.
A challenging market environment
The commitments represent an important milestone in the government’s drive to attract more institutional investment into UK growth opportunities.
“It’s fantastic to see local government pension schemes leading the way. Their commitments show real leadership in aligning with the Mansion House ambitions while backing UK innovation,” Gower-Jones said.
She acknowledged, however, that the timing of the fundraising has been difficult, with venture capital flows slowing globally due to higher interest rates and an increasingly uncertain macroeconomic outlook.
Globally, venture capital funds attracted some $109bn in Q2 2025, according to data by VC firm Bain & Company, marking a 17% decline quarter on quarter with more than 60% of new investments taking place in the US.
In the UK, LGPS funds seeking to invest in venture capital also face additional pressures as they prepare to meet the government’s pooling requirements.
“Engaging and getting people’s attention has been much more work because pension funds have just had less time. They’ve been asked to do so many other things in such a short space of time,” she explained.
Despite these headwinds, she said the successful first close demonstrates continued appetite for climate solutions, and that a supportive policy environment and the UK government’s focus on tackling net zero emissions would have helped shore up investor confidence.
It’s fantastic to see local government pension schemes leading the way. Their commitments show real leadership in aligning with the Mansion House ambitions while backing UK innovation
Beverley Gower-Jones, Clean Growth Fund
Gower-Jones predicts that with the question of pooling consolidation soon to be settled, investors might find more time to address their strategic asset allocation.
“There is this ticking time clock of the March 2026 pooling deadline but there are quite a few LGPS funds and other investors out there who still have a strategic asset allocation for this year but it seems to have been delayed because of the focus on pooling, once pools have made their decision by September, will there be a greater focus of delivering on their strategic asset allocation for the year?”
Portfolio companies
The new fund builds on the Clean Growth Fund’s first investment vehicle, launched in 2020 with commitments from seven institutions. That fund has backed 19 climate tech start-ups, including: Sunswap a developer of zero-emission transport refrigeration units, with a £6m+ order book supplying clients such as DFDS and Tesco.
It has also invested in Rendesco, a provider of low-carbon ground-source heat networks, with over 400 completed projects, a £100m pipeline, and 80% revenue growth in the past year.
Another company backed by the fund is Above, which specialises solar technology using robotics, AI and computer vision to enhance plant performance, the company reports revenue growth of 50% CAGR since 2021.
Fund II will continue this strategy, investing in UK-based early-stage companies with initial cheques ranging from £500k to £5m. It will target innovations across six core areas: power and energy systems, transport, industrial decarbonisation, buildings, agrifood and land use, and the circular economy and waste management.