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“We need to unlock institutional investors for cleantech” – Future Planet Capital joins Cleantech for UK

April 8, 2024

The cleantech community comes from a broad range of backgrounds. We sat down with Ed Phillips, Head of Global Ventures at Future Planet Capital, who just joined the Cleantech for UK coalition. A biologist by training, Ed studied how climate induced changes in our oceans affect the very building blocks of life within native kelp populations—a critical foundation of marine ecosystems. Over the course of his career, however, Ed transitioned into VC and now full circle into cleantech and the oftentimes overlooked Blue Economy.

What drove you to get into cleantech?

I grew up in the south-west of England, and the ocean was always a huge presence. It’s this enormous, beautiful and visceral force that also provides work and food for thousands of people locally. Initially, I wanted to go into research and understand these systems, focussing on molecular genetics and the species-level effects of a changing climate. It became clear however that observing was not enough, I wanted to make a difference.

So, I joined Future Planet Capital as one of the first team members. That was six years ago, and after the ups and downs of any new business, we’ve successfully grown the firm from 2 people to 30 and over $400m in assets. The first part of my career was spent in life sciences, where we were investing in companies like Barinthus Biotechnology (formerly known as Vaccitech), who developed the technology behind the Oxford-AstraZeneca COVID vaccine, now with 3 billion doses distributed worldwide. This really cemented the thesis that early-stage venture capital directed to frontier technologies can have a tangible impact on humanity’s greatest challenges.

I was hooked, but keen to refocus on nature and the climate. At Future Planet, we focus on the toughest and empirically largest problems for society. Having backed companies in Nuclear Fusion, Agtech and Semiconductors already, we were keen to expand our cleantech thesis and this is where I now spend nearly all my time.

So tell me about your current investment focus!

We have three investment teams in Future Planet Capital, united by a data-driven impact-led investment strategy. You can think of it like a trident: one team, based in Birmingham, strengthens local innovation in underinvested areas, another, UKI2S, seeds groundbreaking UK science from inception, and the third—my focus—backs businesses poised to make global impact.

As a firm, we invest across frontier sectors from engineering biology, vaccines and drug discovery to nuclear fusion, space and defence. These technologies have the opportunity to accelerate solutions to secular challenges which cost governments, corporations and individuals trillions of dollars a year. That’s where we want to deploy and help founders build massive companies which drive value for shareholders, people and the planet.

Of the grand challenges, climate is where me and my team spend most of our time, most notably in the Blue Economy. We launched the strategy in 2022 in response to what we saw as a huge funding gap between early stage companies building Ocean climate businesses, and the outsized opportunity to create value. Since starting, we have doubled our conviction that this is remains an underinvested, overcontributing sector.

The sea will be the first victim of climate change, and the vector with which it first hits people and economies worldwide. From maritime decarbonisation to gigaton-scale carbon removal, there are countless opportunities where new industries and structural shifts make this a superb place to invest over the next decade.

Let’s dive into your portfolio then, can you tell us what you’re currently working on?

Looking at the Blue Ocean Fund, we have a diverse portfolio in the UK, US and elsewhere. Our first investment was Rovco, founded by Brian Allen out of Bristol. It produces what we believe is a best-in-class intelligence and autonomy platform for subsea robotics, focussed initially on supporting the deployment of offshore wind projects. As well as enabling the swift and safe roll out of offshore wind, their technology helps take ships out of the water, which in turn of course has a lot of positive dynamic effects on both emissions and the coastal environment in general. The company has grown to double digit revenue and is at a turning point where we believe they will unlock underwater intelligence for many industries beyond offshore wind.

What hurdles to scale do you see your portfolio companies face?

There’s a couple of different issues that hurt the scalability of cleantech companies in general. We see these in our portfolio regularly and there’s so much to be done to allow these businesses to scale into the opportunity and challenge of climate change.

If you had one or two concrete wishes to improve on these issues, what would that be?

We need to unlock institutional investors for cleantech. Pension funds aren’t participating nearly enough in future industry, and the biggest single unlock for cleantech scaleup would be to put pension capital into the hands of sophisticated investors to profitably scale-up innovation. We need billions of dollars to get to where we need to be.

In the absence of such capital domestically, companies will have to look elsewhere for funding. That’s why you get American, Singaporean or Middle Eastern money to fill that gap and part of the reason why we have very few massive domestic companies. We don’t have enough productive capital derived from the wealth we sit on. That’s a disservice to the UK, its pensioners and ultimately their children. 

So why is this the moment to get involved in cleantech?

First of all, this is the right moment for climate action. The challenge is more pressing than ever, you can see the real impact on people in the news ever week. We now also have engaged stakeholders: governments are moving, and you see corporates get more engaged than before to future-proof their businesses. At the same time, consumers – be they B2B or end-consumers, are becoming increasingly climate-driven in their consumption patterns. It’s also a great environment to start a cleantech business. Venture capital is widely available and secular trends are unlocking new business opportunities that didn’t exist 10 years ago -- the marginal cost of (some) energy is coming down, and acceleration in compute, AI and biology underpin platform shifts in where innovation can happen.