Strong growth in cleantech VC investment

There is increased interest in investing in venture capital funds that focus on cleantech, but lack of skilled employees is challenging the growth of companies that attract VC funding, according to HLB Mann Judd.

"We are seeing the maturity in the VC sector, not just in clean tech but more widely, we're seeing a number of Australian VC funds raise capital in the last 12 months, actively supported by institutional investors," said HLB Mann Judd partner, corporate advisory, Nick Guest said. "Institutional investors have a mandate on ESG investment, and we are seeing a compounding flow of funds into the space, matched out with really smart and passionate people with solutions to problems, so it's matching the capital with the ideas and the professionalisation of those companies as well."

Earlier this year, UniSuper announced an allocation of $75 million towards venture capital for its sustainable investment options.

UniSuper secured a relationship with Uniseed, an early-stage commercialisation fund manager. Established in 2000 and now owned by the Universities of Melbourne, Queensland, Sydney, New South Wales and the CSIRO, Uniseed provides seed funding for early-stage research and technology developed by its five partners.

The investment opportunities in the VC space extend to technology designed to enhance user-focused energy management and domestic household optimisation, Guest noted.

"It's about being quite smart in the tech driven piece," he said "If we can generate very useful renewable energy, how can consumer/corporate utilisation of that energy be optimised before the energy storage piece? There's some really good innovation in energy management software. We're seeing quite a flow of investible companies there."

The biggest challenges to the cleantech VC space are not technical problems, but more human - finding enough skilled workers to advance projects within these companies.

"For the founders that we speak to, their number one barrier is an old school people piece," Guest said. "We're seeing that the number of individuals who are coming out of universities with a climate science background is growing, but for the success of a number of these projects, they need the tech-focussed staff as well, and there's a global demand on those individuals."

"Institutional investors are absolutely committed to larger allocations of capital into early-stage investments," Guest said. "The evidence for this would be highlighted by the size of the fundraising in the VC space over the last 12 months.

"In addition to that, there is the growing narrative out of big super in particular around the need to have greater allocations to ESG, which is I think making it more supportive into funding cleantech."

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