How to Raise for a Climate Tech Startup in the UK (2026)
How to fund hardware and long sales cycles with a mix of equity, grants and public capital, and where SEIS and EIS exclude energy businesses.
Why climate rounds need a different plan
Climate companies often build physical things: equipment, materials, plants. That takes more capital and more time than software, and customers such as utilities, manufacturers and councils buy slowly.
So the funding plan matters as much as the pitch. I'd expect to combine equity with grants and R&D tax relief early on, and with debt or project finance later, and I'd show investors that staged plan from the first meeting.
This is general information, not financial, tax or legal advice.
Check SEIS and EIS before anything else
HMRC's Venture Capital Schemes Manual lists excluded activities for SEIS, EIS and venture capital trusts, and the list includes all energy generating activities. A company whose trade is generating and selling power or heat should expect a problem with the schemes.
The test turns on what your trade consists of. HMRC says it will normally accept that excluded activities are not substantial where they account for no more than 20% of the trade as a whole, judged by a reasonable measure such as turnover or capital employed. A company that designs and sells technology to energy producers is in a different position from one that owns generating assets.
Apply for advance assurance with a precise description of the business model, and tell angels the outcome. Most UK angels will ask about SEIS or EIS, so this answer shapes who you can approach.
Grants and R&D relief
Innovate UK is the main source of grant funding for early technology development, and our Innovate UK guide explains the competitions and funding rules.
R&D tax relief helps companies that spend heavily before revenue. Under HMRC's enhanced R&D intensive support, a loss-making SME whose relevant R&D expenditure is at least 30% of total expenditure can claim an extra 86% deduction on qualifying costs and a payable credit worth up to 14.5% of the surrenderable loss.
Watch how grants interact with other funding. HMRC's SEIS guidance counts other de minimis state aid received in the three years up to the investment towards the £250,000 SEIS limit, so a grant can reduce what you can raise under SEIS. Ask your adviser before you accept either.
Working with the energy networks
If your technology serves gas or electricity networks, the Ofgem Strategic Innovation Fund is a route to a first deployment. Projects must be led by an Ofgem-licensed network company or the National Energy System Operator, and they must work with at least one other organisation as a project partner. Startups and SMEs can be those partners.
In the autumn 2026 Discovery round, which opened on 21 September and closes on 21 October 2026, each project can request up to £200,000 excluding VAT and must provide at least 10% of total project costs from private funds.
For a startup, the partner is worth as much as the money. A funded project with a network operator gives you a reference customer and real operating data, and I'd put both at the front of the next pitch.
Specialist equity
Generalist seed funds do invest in climate, and specialist funds understand hardware timelines better. As one example, the Clean Growth Fund says it writes first cheques of £500,000 to £5 million and invites applications from low carbon innovators with UK-based technology. Its portfolio spans power, transport, industry, buildings and agrifood.
When you build the list, check each fund's recent deals for companies with a similar capital profile to yours. A fund that has only backed software will apply software expectations to your burn rate and your timeline.
Angels matter here too. An angel who has run an engineering or energy business can vouch for your technical plan to the rest of a syndicate.
Public capital: the British Business Bank and the National Wealth Fund
Clean energy industries is one of the eight sectors in the government's Industrial Strategy. In June 2025 the British Business Bank announced £4 billion of Industrial Strategy Growth Capital for those sectors, including large direct investments of up to £60 million in UK companies, and said its total financial capacity had risen to £25.6 billion. The Bank also invests through funds and angel groups, so check whether an investor on your list is one it backs.
The National Wealth Fund has £27.8 billion to invest, using loans, guarantees and equity. Its private sector finance page gives a minimum investment of £25 million and says investments typically exceed £100 million.
That puts it beyond a seed company's reach. I'd still include it in the long-term plan, because it shows investors where the money for a first commercial plant could come from once the technology is proven.
Be careful with environmental claims
Climate startups sell on impact, so claims need evidence. The Competition and Markets Authority's Green Claims Code, published in September 2021, helps businesses understand and meet their existing obligations under consumer protection law when they make environmental claims.
I'd apply the same standard to the pitch deck. State the carbon or resource saving per unit, the method used to calculate it and the assumptions behind it. If an independent body has checked the figure, say who.
I'd expect investors in this sector to test impact numbers as hard as financial ones. A modest claim with a clear method earns more trust than a large one with no working.
Stage the round around technical proof
I'd set milestones that reduce technical risk in steps: lab result, working prototype, pilot at a customer site, first commercial unit. Cost each one and say which funding source pays for it.
Show the unit economics at commercial scale and the path to get there, with the assumptions listed. Hardware investors expect early units to lose money, and they want to see why later ones will make it.
Get letters of intent or paid pilots from customers where you can. A signed commitment from a credible buyer does more for a climate round than a large market slide.
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- HMRC Venture Capital Schemes Manual: excluded activities (VCM3010)
- HMRC: R&D tax relief, the merged scheme and ERIS
- HMRC: Apply to use the Seed Enterprise Investment Scheme
- Innovate UK Business Connect: Ofgem Strategic Innovation Fund, Discovery, autumn 2026
- Clean Growth Fund
- British Business Bank: £6.6bn commitment under the Industrial Strategy
- National Wealth Fund
- National Wealth Fund: Private sector finance
- CMA: Green Claims Code, making environmental claims