FINNOV

Abstract: Driven by political pressures to cut down CO2 emissions and to find cheaper and renewable alternatives to fossil fuel based technologies, the clean technology sector (cleantech) has risen as an important target for VC investments in recent years. Using a broad definition of cleantech aimed at alternative energy production and/or providing solutions to environmental problems (Cooke 2008), this paper studies the relationship between innovation and venture capital (VC) funding for 239 UK firms. Our analysis is based on a unique combination of three datasets; (1) FAME, (2) UK Intellectual Property Office patent data and (3) Cleantech Network’s Venture Investments data. We find that the majority of VC backed UK cleantech firms do not patent or patent very little. This initial research suggests the venture capital sector may not be supportive of radical new cleantech innovation; a potential concern for the UK’s vision of achieving a low carbon economy.