Cleaning Up. Leadership in an age of climate change.

Ep27: Beverley Gower-Jones 'Clean Growth Funder'

Episode Summary

Beverley Gower-Jones is the leading figure in the cleantech start-up world. She is the Managing Partner at the Clean Growth Fund which invests in the UK's most promising early-stage, clean growth ventures. She’s also the CEO and founder of Carbon Limiting Technologies, helping companies to commercialize new, innovative technologies. Bio Beverley Gower-Jones is the Managing Partner at the Clean Growth Fund, which is backed by, amongst others, the UK Department of Business, Energy & Industrial Strategy. The Fund, with a mandate of £40million (and aim to get to £100 million in 2021), invests in the UK's most promising early-stage, clean growth ventures.  Beverley has also co-founded Carbon Limiting Technologies in 2006 and run it ever since. The company’s aim is to support companies in new technologies and clean energy. Before that she worked for 20 years at Shell in various roles – from Production Geologist in Scotland, Brunei, and Egypt through well engineering all the way to being Vice President of Shell Technology Ventures. She describes her character traits as determination and perseverance: ‘believe in the magic of your dreams, if you can dream it, you can do it’. Before having children, Beverley was a scuba diving instructor examiner. She studied geology mining at the University of Cardiff, being the only female student in the whole Department of Mineral Exploitation. Links Official Bio https://www.carbonlimitingtechnologies.com/our-people/ Beverley’s LinkedIn profile https://www.linkedin.com/in/beverley-gower-jones-fei-a800032 Clean Growth Fund https://www.cleangrowthfund.com/ Carbon Limiting Technologies https://www.carbonlimitingtechnologies.com/ Clean Growth Fund backs flexible energy ‘auction house’ Piclo (December 2020) https://www.thetimes.co.uk/article/clean-growth-fund-backs-flexible-energy-auction-house-piclo-hhsgv3sdt The road to net-zero – the importance of investing in sustainability (September 2020) https://www.ukbaa.org.uk/the-road-to-net-zero-the-importance-of-investing-in-sustainability/ CGF Managing Partner Beverley Gower Jones (July 2020) https://www.youtube.com/watch?v=rKEnYFxeqD8 Zoom in on Net Zero - with Carbon Limiting Technologies' Beverley Gower-Jones (June 2020) https://www.businessgreen.com/interview/4017170/zoom-net-zero-carbon-limiting-technologies-beverley-gower-jones Interview with Beverley Gower-Jones (June 2020) https://www.cleangrowthfund.com/interview-with-beverley-gower-jones/ About Cleaning Up Once a week Michael Liebreich has a conversation (and a drink) with a leader in clean energy, mobility, climate finance or sustainable development. Each episode covers the technical ground on some aspect of the low-carbon transition – but it also delves into the nature of leadership in the climate transition: whether to be optimistic or pessimistic; how to communicate in order to inspire change; personal credos; and so on. And it should be fun – most of the guests are Michael’s friends. Follow Cleaning Up on Twitter: https://twitter.com/MLCleaningUp Follow Cleaning Up on Linkedin: https://www.linkedin.com/company/cleaning-up-with-michael-liebreich/?viewAsMember=true Follow Cleaning Up on Facebook: https://www.facebook.com/MLCleaningUp Links to other Podcast Platforms: https://www.cleaningup.live

Episode Notes

Beverley Gower-Jones is the leading figure in the cleantech start-up world. She is the Managing Partner at the Clean Growth Fund which invests in the UK's most promising early-stage, clean growth ventures. She’s also the CEO and founder of Carbon Limiting Technologies, helping companies to commercialize new, innovative technologies. Bio Beverley Gower-Jones is the Managing Partner at the Clean Growth Fund, which is backed by, amongst others, the UK Department of Business, Energy & Industrial Strategy. The Fund, with a mandate of £40million (and aim to get to £100 million in 2021), invests in the UK's most promising early-stage, clean growth ventures.  Beverley has also co-founded Carbon Limiting Technologies in 2006 and run it ever since. The company’s aim is to support companies in new technologies and clean energy. Before that she worked for 20 years at Shell in various roles – from Production Geologist in Scotland, Brunei, and Egypt through well engineering all the way to being Vice President of Shell Technology Ventures. She describes her character traits as determination and perseverance: ‘believe in the magic of your dreams, if you can dream it, you can do it’. Before having children, Beverley was a scuba diving instructor examiner. She studied geology mining at the University of Cardiff, being the only female student in the whole Department of Mineral Exploitation. Links Official Bio https://www.carbonlimitingtechnologies.com/our-people/ Beverley’s LinkedIn profile https://www.linkedin.com/in/beverley-gower-jones-fei-a800032 Clean Growth Fund https://www.cleangrowthfund.com/ Carbon Limiting Technologies https://www.carbonlimitingtechnologies.com/ Clean Growth Fund backs flexible energy ‘auction house’ Piclo (December 2020) https://www.thetimes.co.uk/article/clean-growth-fund-backs-flexible-energy-auction-house-piclo-hhsgv3sdt The road to net-zero – the importance of investing in sustainability (September 2020) https://www.ukbaa.org.uk/the-road-to-net-zero-the-importance-of-investing-in-sustainability/ CGF Managing Partner Beverley Gower Jones (July 2020) https://www.youtube.com/watch?v=rKEnYFxeqD8 Zoom in on Net Zero - with Carbon Limiting Technologies' Beverley Gower-Jones (June 2020) https://www.businessgreen.com/interview/4017170/zoom-net-zero-carbon-limiting-technologies-beverley-gower-jones Interview with Beverley Gower-Jones (June 2020) https://www.cleangrowthfund.com/interview-with-beverley-gower-jones/ About Cleaning Up Once a week Michael Liebreich has a conversation (and a drink) with a leader in clean energy, mobility, climate finance or sustainable development. Each episode covers the technical ground on some aspect of the low-carbon transition – but it also delves into the nature of leadership in the climate transition: whether to be optimistic or pessimistic; how to communicate in order to inspire change; personal credos; and so on. And it should be fun – most of the guests are Michael’s friends. Follow Cleaning Up on Twitter: https://twitter.com/MLCleaningUp Follow Cleaning Up on Linkedin: https://www.linkedin.com/company/cleaning-up-with-michael-liebreich/?viewAsMember=true Follow Cleaning Up on Facebook: https://www.facebook.com/MLCleaningUp Links to other Podcast Platforms: https://www.cleaningup.live

Episode Transcription

 

Episode 27 - Beverley Gower-Jones 

SUMMARY KEYWORDS

finance, companies, fund, money, people, investment, building, sector, technologies, power, entrepreneurs, industry, invest, thinking, piece, growth, investors, understand, years, technology

SPEAKERS

ML, BG-J

ML  00:11

Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, my name is Michael Liebreich, and this is Cleaning Up. My guest today is Beverley Gower-Jones. She's the managing partner of the Clean Growth Fund. That's a £40 million public-private venture capital fund, looking to raise money and close a full £100 million by the end of this year. She's also the CEO of Carbon Limiting Technologies. That's a consulting company she set up in 2006, to help companies in the low carbon economy to accelerate their growth. She graduated as a geologist and spent the first 17 years of her career at Shell, but moving into corporate venturing. So she understands not just how to finance companies, but also how to grow them. And she's helped an enormous number of companies and entrepreneurs to do just that throughout the years. Please welcome, Beverley Gower-Jones. So Beverley, welcome to Cleaning Up. Thanks for joining us.

 

BG-J  01:21

Thank you, Michael. It's lovely to be here.

 

ML  01:24

And where is 'here' this evening?

 

BG-J  01:26

Oh, here this evening is Hampshire and lockdown number four I think we're on, at home.

 

ML  01:34

Oh, don't... you know, I used to, when people talked about 'the' lockdown. I used to get a laugh by calling it 'lockdown one you mean'. And of course, we're now on three or four. So thanks for taking the time to talk to me here today. And for the viewers and listeners, they should know that I am on the advisory... What do we call it? Advisory board? The advisory group for your Clean Growth Fund. And we've got a meeting tomorrow. So some of the things that we'll talk about maybe also deals or or initiatives that we'll talk about tomorrow. But give a thumbnail sketch of the clean Growth Fund. Let's start there. What is it and what are you doing with it?

 

BG-J  02:20

Okay, so it's a £40 million venture capital fund to invest in low carbon and clean technology companies, with their primary activity and business based in the UK. It's £40 million at the moment. I'm looking to increase that to 100 million over the course of this year. And it's looking at, you know, investing in things that can make a material difference to our greenhouse gas emission reduction targets, to enable us and support the move to net zero by 2050.

 

ML  02:58

Okay, so it's classical venture capital funding structure, but it has got governmental...BEIS has supported it, correct?

 

BG-J  03:06

Yes. So the two Cornerstone LP investors are the UK Government, BEIS, with £20 million commitment, and CCLA, who are an institutional investor for charities and church with also a £20 million commitment. And I'm now talking to other LPs to increase that fund size to 100 million.

 

ML  03:32

So you've done your first close at 40 million, and looking to get that to 100 million during the course of the year. Let's come on to what sorts of technologies you like the look of them, that you're targeting. But just in terms of the process, how long did it take to get that all lined up so far?

 

BG-J  03:56

Well, it took a long time. So initially, when I founded Carbon Limiting Technologies, with the three others, in 2006, we had a strategy meeting in a caravan in my garden because my house was being renovated at the time. And one of the things we said is that, you know, a core plank of the business would be a venture capital fund. So it wasn't something that kind of just woke up and did one day, we started to build track record by working in the clean tech space. We've worked with over 350 companies now, because building track record is absolutely fundamental, to be able to show that, you know, you can identify the right types of companies and you can manage... Managing the portfolio is critical, so that you can really manage the acceleration and the growth of those companies. I really started in earnest five years ago, I found that when I was supporting companies, I came across the same thing again and again. 

 

ML  05:01

Just to clarify then. So Carbon Limiting Technologies is your consulting company, which you started in 2006. And that was helping build companies: really actively coaching, supporting, growth hacking and so on. And that was the first stage, was to do a bunch of that. And then to raise the venture fund, is that right?

 

BG-J  05:23

Yes, yes. So I'm a geologist by background, not a financier. And so I started building track record in the space through Carbon Limiting Technologies, through the consulting side and actually working with companies to grow them. Five years, as I was doing that, I found kind of over and over again, they really struggled to get investment finance, particularly in that first commercial demonstrator type, prototype phase. And I kept looking around for the, you know, for funds to appear. And, you know, there weren't really. So I decided, you know, kind of about five years ago that I'd do it myself, I found an advisor in George Whitehead, who was Octopus at the time, and started to do all the things that you need to do to put a fund in place. So, you know, I went to Number 10, I went to the Cabinet Office, I spoke to a lot of private institutional investors, the Committee on Climate Change, House of Lords, Bank of England, and just literally spoke to everybody to garner the enthusiasm and kind of share share the case,

 

ML  06:43

Including, I mean, that wasn't your only advisor, because that was around the time that... When you and I met, you were judging the Shell Springboard Technology Awards. And we're talking about now, it's going to be more than 10 years ago. And I think you were talking about, you know, eventually raising a fund. And then you asked me to be an advisor, probably, as you say, probably five years ago. And I guess the point here is, it's been a bit of a long road, hasn't it?

 

BG-J  07:12

It has been a long road, but I think quite often the things that are worth doing, can take a long time to do. It's, you know, we're here now. And I think that's, you know, it's really important for the for the entrepreneurs who were, you know, looking to have their businesses funded. It's been an exciting road too. So it's had its ups and downs, people have held the tissue box with me on more than one occasion. But, you know, there's also been the excitement of, you know, of doing... going down that journey.

 

ML  07:53

But I mean, it's a completely different world, this last year or two, not just for yourself, because you closed the fund, and you now get to invest, but also just the environment, I mean, everything, the focus on climate, the availability of technologies, and the seriousness of the entrepreneurs, I mean... My impression certainly is that this is just chalk and cheese.

 

BG-J  08:17

It is. I mean, 2019, I think was a massive wake up call for, you know, society in general. You know, the hottest temperatures on record, you know, ppm of carbon going through the roof. A lot of the wildfires that we saw, and all the kind of weather impacts with flooding, and so on, really becoming, you know, hugely visual, and very... It really changed everything that, you know, 2019... People started to take it much more seriously. I think now every board of every major company, climate change is kind of top of the agenda. Whereas some 10-15 years ago, it wasn't, you know, it just wasn't even mentioned. And actually, we would be telling our entrepreneurs to base their business cases on value efficiency or cost saving or...

 

ML:

Don't mention the climate.

 

BG-J:

Don't mention carbon or climate. But now it's, you know, for the fund it's the top thing we asked for, they have to fill in a climate assessment report. So things have just changed beyond recognition.

 

ML  09:30

Are you are you worried? I mean, you've got your fund now, the first 40 million, and you're starting to invest. Are you worried about the point we're at in the cycle? I mean, it's a kind of a nice way of saying, 'are we in a bubble?' And you're going to be investing at the top of it...Are you going to have trouble producing good returns? 

 

BG-J  09:48

I don't think so. I think the timing for it is perfect. I think this next 10 years is absolutely pivotal in in all the key sectors that we look at. So in, you know, the building sector, the transport sector, industry, waste, power, it's, you know, it's a really kind of fundamental time, when things are really going to decarbonize, usually by by 2030. You know, hopefully a price on carbon will come, I know, there's gonna be a new UK Emissions Trading standard. And I think, I think the time is absolutely perfect.

 

ML  10:27

And you don't worry, that already gets priced into the investments that you're going to make? In other words, everybody agrees with you. And therefore, you know, just two college grads with a piece of paper suddenly go running around thinking that they're worth, you know, umpteen millions before they've done anything.

 

BG-J  10:43

This is an interesting point, Michael, andI kind of, you know, I understand it and take it. But our hypothesis, when we set the fund up is there wasn't enough investment at this, first of a kind, demonstrator, product/market fit. And kind of in testament to that, in the first two months of having the fund open, we had over £500 million worth of deal flow. And that's from the companies that we had the, you know, the request for. So, you know, sadly, in a way, depending on which hat you're wearing, I don't see that.

 

ML  11:23

So you've made the first investment. This I know, before our board meeting tomorrow, you've made the first investment in a company called Piclo. You want to talk through why Piclo? The background of that investment, and, you know, because not everybody will know, either the investment process nor the company.

 

BG-J  11:44

Sure. So the process is quite long. We like to invest in companies that we know, and have built relationships with. I think that's a key part because we're going to be with those management teams for, you know, a long time, helping them build those businesses. Piclo is a flexible trading platform, for trading flexibility for the power system. So I've known James Johnston and the team for probably about six years, because they've received grant funding through some of the companies we've supported through the grant funding that they've received. And they've done the largest auction for flexible trading in the UK, £14 million was traded for UK power networks. And they're now expanding internationally. And building and growing that business. Clean Growth Fund invested because we like the team, and they've been together a long time chaired by Volker Beckers, we can see huge market potential in the next five years for the technology. If we're really going to bring the number of heat pumps and the number of electric vehicles onto the grid that is, you know, talked about in the Energy White Paper and so on, then we absolutely have to have way much more trading of demand and supply then we have at the moment. And so that's key. And so, you know, those kind of things combined together. We were able to invest in the company.

 

ML  13:36

So now, as we speak, the UK market iss pretty tight, isn't it? All the heat pumps are going, well, there's the cold weather. So there's high demand for gas for electricity. And you've got the old coal fired power stations even are running, which they don't normally do. So is Piclo doing well, this week?

 

BG-J  14:00

And I believe so. I think they're working extra hard. And, you know, I think we'll see more of that to come.

 

ML  14:11

Because that's that's the role they play. I mean, they're helping to sort of square the circle between variable renewables and demand, right?

 

BG-J  14:19

Yeah, so demand response or they actually... The thing they have is the platform, the software platform, which enables distribution network operators to put their requirements on the platform, and it enables aggregators or people with load, to put their assets on the platform. And then they can then... they run and manage the auctions, you know, between those two sets of parties. So they are kind of a enabler or facilitator in ensuring that we can actually manage our demand to meet the supply that's available.

 

ML  15:01

An did you lead the round?

 

BG-J  15:02

Yes, absolutely, we did. One of the things that mandates that the Clean Growth Fund has is to lead rounds into investments to encourage co-investors and others that are interested in investing in low carbon or clean technologies, but maybe haven't done it before, or maybe want to, you know, partner with and co-invest with someone. And so we see that as a core part of our role.

 

ML  15:32

And so the mandate, and that's presumably why BEIS supported it is to try and get some private money in, at the level of the fund, and then some co-investors as well. So you've got some two multipliers there exactly. On the Piclo deal, did you bring in some co-investors?

 

BG-J  15:50

So the Piclo deal, we're talking still with a number of very interesting co-investors. So we tranched the money in two tranches, and the round is still open. So we're hopeful to be able to announce strategic corporate investor in the next couple of months. But sometimes I think... And another reason the fund invested in Piclo is that you really have to understand the power market, you really have to have that deep sector knowledge to to be able to make that choice and make that investment. And I think that's one of the things that the fund brings is that kind of knowledge and understanding. So we were confident and able make that work where other other funders, you know, were maybe not so sure.

 

ML  16:49

Yeah, very good. What are some other areas? You've got this area of flexibility and the grid... What are the other areas that you're looking at? Because you've got 500 million of deal flow, maybe you just say, well, we just sort of sit here and the deals come to us, we don't have to be strategic. But I know that that's not the case, right? I'm aware that you're thinking quite kind of carefully about the places where you can play, what are those places?

 

BG-J  17:14

So in terms of the process, Michael, what we do is we create what we call landscape maps. And I know you've seen the demand response landscape maps that we've produced. And so then we look at each area strategically, we look and we understand what the regulatory environment, what the drivers are, we look at... what the kind of market situation is, who the competition is. And we kind of map out as far as we can, as much as we can, the dynamics and what we think is happening in a particular sector or particular space. And one of the things I would say, because of course, on our website, for example, you'll see that we talk about the five key sectors, which roughly make up 20% of emissions each. So that's power, buildings, transport, waste and industry. And we're finding a lot of innovation in the gaps, if I can call it that. So industries aren't siloed anymore. If you look at the transport sector, and the power sector, for example, and then you look at vehicle to grid, you can store, of course, energy in the car battery. And so therefore, you know, those two industries aren't discrete. If you look at buildings, and you know, and power, for example, then, you know, people that were just consumers of electricity, are now producers, and so you have prosumers. And so there's a lot of innovation kind of in these gaps. I mean, if I talk about a different sector, if we look at our food and drink, and then we look at chemicals, you know, no longer do we need to throw our biomass waste away, we can take that biomass waste, and we can use that to produce alternative fuels or chemicals. And so then we see a real link-up with the chemical sector, and the food and drink industry, which are all completely new value chains, completely new supply chains. And what's interesting in those is that the way value is going to be created is different, and who is going to capture that value is unknown. And so with change comes opportunity. Also comes a certain amount of uncertainty, of course. So, and those are the kind of real areas where we're exploring, you know, quite deeply,

 

ML  19:35

That very much resonates, what you're talking about, the new value chains. Because I gotta be honest, when I first heard the word circular economy, I thought, well, you know, not really, that's just you know, fanciful and you know, there's recycling and why can't we just call it recycling. So, recently, I was talking to somebody who was, you know, building a business around glass fibre recycling wind turbine blades and other sources of glass fibre. And I was thinking that the whole business would be, you know, all these manufacturers, they've all got a problem because they've got this waste and they're not allowed to put it in landfill. And they're just getting more and more and more of it. And so the fundamental sort of mainspring of the business, I thought was solving someone's waste problem. And this entrepreneur said 'it's just a fantastic raw material', we can do this with it, and we can do that with it. And the value chains don't exist yet. But it's the most amazing, you know, resource. And not only is it free, people pay us for this incredibly valuable thing that we can do these marvellous. I just thought, okay, we're in a different world here. You know, this is really interesting.

 

BG-J  20:42

It is, it is. I wonder what's going to happen with those waste sources that are currently free when the people that generate them realise they can actually, you know, they're valuable to someone.

 

ML  20:52

The economics filp, historically what happens is the thing that you used to pay people to take away, you now, you know, auction to the highest bidder. And that's incredibly healthy, it's incredibly healthy when a when a waste stream becomes valuable.

 

BG-J  21:07

Yes. Yeah, absolutely. It is.

 

ML  21:10

We've seen that, this has happened in other industries and other sectors. So it's a real thing that should happen.

 

BG-J  21:19

I agree. Yeah, completely. And I think it's those types of things, we understand the business models and so on, which just make it really fascinating.

 

ML  21:33

But Piclo's a software company. I mean, it's not an asset-heavy company. But a lot of the areas that you're looking at there are assets involved, sometimes it's very asset intensive. And that would be whether it is something in the, you know, circular economy or the agriculture, the food industry, energy industry, transport industry. And I think this has been one of the... maybe this is part of the genesis of the of the fund, but that kind of valley of death where you can do something in the lab, and it makes sense. And it definitely should be part of some future industrial ecosystem. But nobody wants to put in the asset finance, everybody wants to do the asset-light models.

 

BG-J  22:17

Yeah, so part of the conversation earlier about the first of a kind, demonstrator thing is to recognise that I want to do the asset- heavy models. So it's engineering solutions, we have some fantastic engineering here in the UK, and trying to get some of that financed is part of what this fund is about. And actually, one of the trends that we're seeing is that infrastructure investors, because if, you know, the kind of simplistic view, but there's quite a lot of, there's an awful lot of infrastructure finance, but there aren't many infrastructure projects. Whereas on the other end of the spectrum, there's an awful lot of innovation, entrepreneurs and there's not very much venture capital or other sources of finance to fund those businesses through that, you know, kind of Series A place. And so what we're also seeing is that some of the infrastructure funds is approaching and starting to come earlier, because they then get an early view on the pipeline, and they can then start to pull things through. So for example, Arden, acquired Wintics, which is a kind of an AI piece, we're looking at traffic flow, arguably, Wintics is a venture capital investment, but actually Arden acquired it, because they could see the infrastructure, you know, kind of opportunities offered. And we see much more of that, you know, type of movement and activity from the kind of infra funds.

 

ML  23:55

And I want to stop you there, just for one reason only, which is that some of our viewers and listeners are not very technical, you know, maybe because they're earlier in their career, they may not be financial. And I think it's a really critical, you know, we, you and I can talk about infra funds, and we know what we mean, but not everybody does, and, you know, there is, you know, what you're doing is venture capital, but even that can go from sort of asset-light, just doing software just doing, you know, technology, pure technology to actually businesses that sell things. But then the infrastructure funds, they tend to be you know, that's all about project finance, where risks are very different, aren't they? So maybe elaborate on that, if you could.

 

BG-J  24:48

Sure. So, project finance, infrastructure funds typically would look to do project finance. So roll out a large number of projects where the risk is lower and the return is lower, and the time period is generally much longer. And so then the capital is recovered through a debt repayment type piece with interest. Whereas a venture capital fund, you invest in a business for equity. So you take shares in the company in exchange for the cash, you sit on the board and you coach and you work with the company to help it grow, you know, to a point where you can exit it. And when you exit it, you sell it to an acquirer, or you put it on the IPO. And then, you know, by doing that, you get your capital back plus, some, hopefully, to be able to, you know, repay the people, the LPs, that gave you the money in the first.

 

ML  25:51

Okay, LP the limited partners, that's the people with the money. The key word that you've used, there is risk. And I just I do worry that, you know, a lot of people don't really understand that a lot of the sort of the hard work of... what finance does, is match a pool of investment, a pool of money to the appropriate risk level. And you can either, you know, you can either get high returns from high risk or low returns from low risk. And the clever bit then, is to try to get high returns, but manage the risks down or to get, you know... You're spending as much time thinking about managing risks down as getting returns up, aren't you?

 

BG-J  26:29

Yes, I mean, a lot of it is about that risk management activity and understanding what that is at the beginning. And knowing what the plans are for mitigating or managing that risk to enable the growth of the company through sales and so on.

 

ML  26:46

Right, and you're doing that by sitting on the board and coaching, you try and reduce the risk effectively.

 

BG-J  26:52

We do that in a number of ways, actually. So part of that will be in, you know, conditions, in terms of putting the money in...

 

ML  27:04

Clevers of structuring of the finance as well.

 

BG-J  27:06

And the team is there, and there's 100 day plan, and all the kind of things that you want to kind of assure yourself of before actually proceeding with the investment. And there's quite a lot of work in that. And then, in terms of working with the companies, one of the things that Clean Growth Fund has done is it's put a services agreement in place with Carbon Limiting Technologies, which is a consulting company, so that we can work with the venture partners, and associates at CLT, to drive that commercialization of the business. So we can work with the companies  not just to, you know, on the board, but actually much more hands-on.

 

ML  27:48

So you have a sort of talent pool that you can draw on if somebody needs a marketing plan, or needs a sales force, remuneration structure created and stuff like that.

 

BG-J  27:59

Yeah, so or to work out value proposition for your product, or whatever it might be.

 

ML  28:06

It's very cool. And it's, I will say, you know, I'm delighted to be involved in my little tiny way. Because I do think that there is an insufficient emphasis in all of this, on the just the sheer mechanics of building a business, you know. We can all talk about climate, we can all talk about high tech, we can talk about policy, but at some point, you have to hire a sales director, and you have to price a product, and you have to deal with returns, and you have to do all sorts of basics. And it's very easy for those to get lost. And for companies, good companies to fail for lack of just the the sort of the day to day mechanics of building a business.

 

BG-J  28:46

Yeah, traditionally, you know, if you look at any product, let's take the mobile phone, it typically takes 30 years for mass market adoption from, you know, innovation through. And of course, as you know, with climate change, that's time we don't have, you know, we need to do this in 10 years. So we've got to find a way of speeding everything up. And we've never had to do that before. So I kind of call it co-evolution, but it's about working with the supply chain, with the finance, with the regulation with the standards, with the innovators to kind of make everything happen, you know, three times faster.

 

ML  29:26

Is that co-evolution? Is that short for coercive evolution, because you forced them to go faster?

 

BG-J  29:33

It could be!

 

ML  29:37

Okay, so this is all the clever stuff and hopefully that's been of interest to you know, anybody thinking about a career in venture capital or in finance, you know, to try to solve this climate challenge but you know, £40 million or even £100 million, is just a tiny it's not even a drop in the bucket if you really think about climate... You know, we're going to have to be investing probably a couple of trillion a year in the solutions. So don't you find that sort of daunting? And how do we solve such a big problem with such small amounts of money?

 

BG-J  30:17

I think what we have to realise is that you have to have the right tool for the right job. And so to have a venture capital fund that was a billion or a trillion pounds, and, you know, for what we're looking to do, investing in Series A companies, wouldn't work. So it's not the right sum. So, you know, the right size for VC fund, for what we're looking to do is 100-150 million. And I think we have to be careful of that. So, you know, the right size for an infrastructure or project debt financing piece, you know, might be those kind of, you know, orders of magnitude larger than what we're talking about here. I think that's the kind of key thing really to take into consideration and to understand. There is a vast amount of money to mobilise, to make this happen, it will come from different places, it will come from governments, it will come from private industry. And from the City, from the finance community. And, of course, the Green Finance Institute have been really supportive, you know, really behind that. And so, I think it you know, when I look at that,the 100 million in isolation, I'm absolutely not saying that's the only thing that's needed. But it's the right tool for this job.

 

ML  31:47

Okay, so there's an... If we're talking about an ecosystem of finance, as well as that ecosystem of technologies, and you've got that piece, which is those Series A, the sort of the first institutional money that comes in to scale up. What is the single... if you look at the ecosystem around you, what would you like to see? Or what single development would help you and your companies, your portfolio companies accelerate?

 

BG-J  32:16

I kind of want two wishes, please. So, in terms of the first one, it's joined-up funding, we don't have a joined-up funding stream. So from the angel and the grants through to the early stage VC through to the project finance. And a lot of the companies we're looking at need debt finance as well as venture. And so a more transparent and joined-up process I think is fundamental. I think probably Life Sciences, from what I understand maybe do it slightly better than clean growth at the moment. So

 

ML  32:53

Joined-up meaning as the company matures... Or I mean, is it where is it failing at the moment?

 

BG-J  32:58

So if we look at, there's... a lot of money goes into grant funding, and a lot of money in and, you know, angel investment, angel community networks are quite active. But there's no... if you're, for example, if your grant programme, you know, isn't called in time, you might have to spend a year or so looking for that money. And there's not enough money at the venture space. And one of the roles of the Clean Growth Fund is to waterfall more money in. But we need a proportionate amount of venture money for the amount of kind of grant money that's spent. CEOs and entrepreneurs spend, you know, months and months looking for and trying to attract finance, whereas they should be delivering on their business plan. And that takes them three or four years longer. You know, to actually commercialise the technology,

 

ML  33:55

I was very lucky building New Energy Finance. I mean, it didn't feel lucky at the time, it felt incredibly painful. But I did the first two years without raising money, I just couldn't take myself away from the business for long enough to raise external money. And I was lucky because I had a little bit of money and I was able to attract other people into the business who worked for incredibly low salaries and in some cases, put money in as well. And I managed to keep the thing going on vapour for you know, fuel vapour for two years. But it was a an information business. I wasn't, you know, building widgets, selling widgets, you know, providing life critical services, transportation, energy and so on. So I was lucky.

 

BG-J  34:41

Yeah, and my, I suppose my second wish is kind of on the other end of the piece. And that is that the institutional investors have asset classes, and they can't just switch money from one type of, you know, investment to something different. And so I think to have more of 'alternatives' is the class thata clean tech comes under. And so to have more rapid creation of alternative asset classes that are risk taking and can look at illiquid investments would be my second wish.

 

ML  35:21

So this would be things like mezzanine finance and warrants, debt with warrants and just more creativity around what they can do.

 

BG-J  35:30

Yes.

 

ML  35:35

What is the role... You know, we've clearly got a highly supportive environment from a governmental point of view setting aside, obviously, the challenges, the vast economic and social challenges of COVID currently, but there is a real, you know, commitment to the net zero target. And, you know, I know, it's serious, because I keep on getting calls from people in the Treasury to talk to them. That's very different from the past few years. But is there anything else? I mean, what's the role of, you know, could the government, for instance, procure efuels for different fleets that they control? Maybe some of the, you know, whether it's in the military or in or I was gonna say, post office, but of course, that's not government anymore. But But within the NHS? You know, are there things that could be done? Could procurement be part of the matrix here?

 

BG-J  36:27

I think it could be, and I think it's one of the things that, you know, is a key trigger, is that scaling up... for scaling things up is that volume of supply, and that procurement pace. So, you know, if we look at something like Power-2-Fuels, where we're going to create, you know, potentially aviation fuel from, you know, from electrolysis, and so on, then we need really a buyer-supplier alliance. So we need the buyer, you know, British Airways, or whoever it is, to commit to buying the fuel that's generated through the process, even though that fuel is going to be more expensive. Because then, you know, as the supplier is unable to scale up the process and take cost out of the process. Costs will come down, but it derisks the process for the supplier, because of course, it's very difficult to say I'm going to spend, you know, whatever it is £50 million on building this process and hope that someone buys it at the end of the day. And, you know, government does procure a lot. I think we were talking earlier about Ministry of Defence and you know, their aviation aircraft fueling needs. And so I think there is a big opportunity there for sure.

 

ML  37:44

Because I must say, I feel there's a big part of me, you know, despite the fact that I enjoy, you know, working with you on the Clean Growth Fund, there's a part of me that says, I really don't like state investment in the sort of venturing,

 

ML  37:57

 Exactly, you will have had that conversation with me, because I'm afraid everybody has to dull though it is. And you know, I'm sort of, okay, when it's a private sector person, like yourself managing it, what I really don't like is when it's the, you know, the bureaucrats giving out the venture money. But you kind of can avoid that. I mean, because if you have a mandate, a purchase mandate that says, if you can hit a light bulb that does this, or a vehicle that can do this, or a fuel that can do that, or whatever it is, then you know, that there is this amount of market guaranteed that you can... It feels much less like picking winners.

 

BG-J  37:58

We had that conversation.

 

BG-J  38:37

And I think that's... I can see some kind of sense and logic in that. I think, you know, where there's a kind of an intervention needed, I think government has a key role to play. And I think that is absolutely true in green finance and the venture space. I don't think that precludes the opportunity for procurement. And given of course the, you know, public procurement rules in terms of making sure it's a fair process, fair competition, and so on. So, but, you know there is a big role in that kind of purchasing piece, which would help entrepreneurs with new solutions, be able to test them out. And it's one of the reasons we focus quite heavily on partnerships, industry partnerships with entrepreneurs, because not only do you then understand firsthand what the market need is for a solution, because that product/market fit is really critical. But you can, you know, you can really work with that industry partner to commercialise that solution and then take it to market, they can be that first early adopter and take it to market

 

ML  39:59

And let me just take a step back in terms of your own sort of career approach to this because you've been doing that as a consultant, 2006, Carbon Limiting Technologies, you've been helping companies kind of get product/market fit, find their first customers, all those sorts of things. Why did you get into this? Did you suddenly in 2006 get terrified about climate change? Or did you think, you know, that this is just a good space to build a career? And where are you coming from?

 

BG-J  40:30

Um, so I'm a geologist by background. I was an avid scuba diver before children. And I think, when I was, you know, enjoying that hobby, I could actually see the degradation in the corals and the underwater habitat, which was, I suppose, kind of like the first awakening. I worked for Shell for 17 years and I clearly remember having a conversation with my colleagues, whether we were going to be the generation known as the generation of polluters or the generation of communication. I kind of argued, you know, strongly that we were going to be known as the people that polluted the planet. And I guess, well, I really enjoyed technology transfer and commercialization. I was a founder of Shell Technology Ventures, and decided that that was the direction I wanted to take my career in.

 

ML  41:29

Shell Technology Ventures it's just been announced that for 2020, they were the top investor in terms of numbers of deals. So you were there right at the beginning? That was... You founded it

 

BG-J  41:43

Yeah, there was a small team of us that co-founded Shell Technology Ventures, it was half Houston-based and half Holland-based. I had a team in Houston. And I was... I was vice president for drilling and construction, for well construction. That was my area, which was also hardware and asset heavy. And so that was how we started out.

 

ML  42:11

Well, if we had if we had endless time, I would start to ask you about Eavor because I'm an advisor to Eavor. Where essentially drilling... You know that if they can drill their horizontal wells really fast, then it'll be an amazingly successful solution. And if they can't, then I don't know, presumably less successful. But I just want to... Rather than go down that route, I want to sort of finish just talking a little bit about where do you see the next sort of decade panning out? Because you know, COVID aside, if it wouldn't be for COVID, we'd be sitting going, right, we're in the first year of a critical decade, this is what we've got to achieve by 2030, that's what we've got to achieve by 2030. Are we going to get there, do you think? And if so, why?

 

BG-J  42:58

And I'm positive that we are going to get there. I think Simon Sharpe, Cabinet Office has just published a paper actually looking at tipping points, and is talking about the power and the electric vehicle tipping point is actually much closer than than we think it is.

 

ML  43:21

Power has tipped, I mean, we've still got a lot of pushing and shoving to do. But you know, I've thought the power tipped probably I mean, I guess I would became convinced of that. I'd always, you know, talked about it. But I was convinced in about 2011-12 and electric vehicles, I was convinced in about I mean, those two are the easy ones, are they not?

 

BG-J  43:44

In the UK, I think absolutely. From a global perspective, you know, so I think that's really key. I think just the pressure, the public pressure on, you know, to do the right thing is really, really growing. And, you know, when we put up, humanity, when we put our mind to something, it's incredible what we can achieve. So I was partly relieved in 2019, when, you know, climate change rose up the Ipsos Mori poll of things that people were concerned and worried about. And that kind of general recognition from everybody has really kind of given me that kind of sense of positivity to think, yes, you know, we can do this. We can get there. We haven't given ourselves any time. You know, we've actually kind of charged ahead, but I do, you know, I think we have to really remain positive on the topic.

 

ML  44:53

And what about, you know, just coming back to the sort of taking the technology, sort of... Okay, the societal change is clear. The technologies, I do think, you know, power transport relatively sort of, you know, clear line of sight. But there are some really tough ones. I mean, you know, heating, aviation, shipping, various industrial sectors, I mean, we get some line of sight on steel but cement. How do we? You know, I'm delighted that you're optimistic, but tell me, come on, infect, me with your optimism for those hard sectors.

 

BG-J  45:29

And so I don't have all the answers, I think we have to the amount of kind of innovation that I see in those different sectors. So I was looking at a business today that was looking at taking carbon dioxide from cement and creating aggregate technologies with it, so mineralization. And just the amount of innovation, you know, is incredible. And so whilst we won't always go down the right road initially, we have to take the steps, learn and then, you know, do something, do something else. So if we look at hydrogen, for example, and I know you've been doing a lot of work on hydrogen where is it going to be used at the end of the day? You know, is it going to be used for home heating? Or is it going to be used for things that are mobile? Not totally clear or obvious, but if you don't start then, you know, you've got no chance of finding out. So I think that's the, you know, that's the key. And I think probably we need some, like moonshot type groups to take some of these knotty issues like building, heating and cooling, like industry decarbonisation. So I did a lot of work on industry roadmaps, decarbonisation roadmaps to 2050. And really start to do some showcase type, you know, demonstrations to actually make those things happen. And if we can do small things rapidly, and learn from them quickly, and then learn and learn and do more, that's actually better and more effective than building one big thing and then realising 'actually, this doesn't work'. 

 

ML  47:17

I wonder if this is the grand overall picture that's emerging here, that we could paint, which is you sort of need a period of experimentation and learning. And then, you know, you need to settle on some solutions. And  that process maybe takes sort of five or ten years, and then you need a couple of decades, because these are huge sectors, incredibly capital intensive, they involve human behaviours, all sorts of things. And it probably takes a couple of decades to sort of grind through and actually get those out there. Now, that's what I see happening on, you know, renewable energies. It's happening on transportation. And you know, but if we don't reach the end of the decade, with line of sight on cement, aviation, shipping, glass, ceramics, etc, then we're not going to get there by 2050. So, I mean, if you agree with that model, that says, your work this decade is pretty, pretty damn important. Right?

 

BG-J  48:17

That's right. And if you look at things like the Glass Futures Lab and the glass, and you know, that work is starting, and I think that's what's encouraging. And we need more of those types of things. And it's, you know, it's really encouraging to see the types of innovation that they're looking at deploying in the glass sector.

 

ML  48:38

Well, I've known you for over a decade, I've watched you being incredibly determined and persistent and clear-sighted in achieving your goals. I feel like probably, if we had this conversation again in 10 years, we'd look back and say, well, that was just.. that wasn't even base camp. That was a 40 million fund. But it's definitely a huge achievement. So I'll congratulate you again on the closing and on your first investment. And look forward to our advisory board meeting tomorrow and to the future ones that we're going to have.

 

BG-J  49:16

That's that's lovely, Michael, and thank you very much. I really enjoyed our chat. And I look forward to seeing you tomorrow. 

 

ML  49:23

So that was Beverley Gower-Jones. She's the managing partner of the Clean Growth Fund, and CEO of Carbon Limiting Technologies consulting company that helps companies in the low carbon economy accelerate their growth. My guest next week on Cleaning Up is Fatih Birol He's the executive director of the International Energy Agency, and probably the preeminent energy economist of his time. Please make sure you join me at this time next week for a conversation with Fatih Birol.