Hi Nick, how did you come to angel investing?
GAS originated from work I did at the turn of the millennium of setting up and running an applied research institute that set out to do something new, which was to create cross-sector, cross-border partnerships studying resource use technologies. It started with recycling, and did the applied research, so that technologies coming out of the lab would be almost ready for commercialisation.
That institute – International Resources and Recycling Institute– then expanded and started to focus on renewable energy, transport and water management technologies.
And increasingly it got busier and busier. When it was set up I imagined it quite small, but after climate change was really put on the agenda by Al Gore and the Stern Report in 2006 and 2007, it expanded rapidly. Sums of money were made available by the EU for this kind of work and transformed from hundreds of millions to billions of euros. It became so much more part of public attention.
The institute got busier, and I became full-time, with a team of 15 people. Our university members provided the specialist skills.
My frustration was that I saw these technologies being developed, and they were working, capable of making a difference. But there was no follow through. They were never translated into commercially available technologies.
So I set up GAS in 2013 as an experiment, to see whether I could find the mechanism where the commercialisation of these technologies could be achieved.
It was designed to be the only angel syndicate in the UK specialising in the green economy. That changed to specialising in the fight against climate change. Because of this unique status it has attracted a lot of attention.
Even in the early days we worked on an enormous amount of deals. We just phoned around to investors; we did not even have pitch events. It was very informal. I then realised it could work. In 2017 I gave up running the institute and decided to concentrate on GAS. I relaunched it properly.
Since then GAS has attracted nearly 300 members. We have 28 companies in the portfolio and over £13 million invested. In November 2020 we launched our EIS Climate Change Fund, which has been extremely successful in its first 2 rounds of fundraising. We just reached £1.5 million in the Fund.
What were the challenges of building a Greentech angels club? And how did you overcome them?
The main barrier is bandwidth. We need to be able to do more. We have 700 applications from start-ups and early stage companies a year. This year we are expecting over 1000. We are turning away hundreds. We know there are good deals we are turning away. We need more investors to invest in these innovative companies.
We have defined our terms really very strictly. The companies have to be reducing carbon emissions or green house gas emissions, or removing carbon from the atmosphere.
A lot of them are pre revenue. We invite them to examine what their results will be in terms of carbon emission reduction once they are successful. If they can’t demonstrate this, if they cannot reduce carbon emissions, we do not look at them. That is quite a strict criterion, but it’s one that of the 700, they nearly all meet.
The management of carbon now is going to determine whether we, the human race on the planet, will be sustainable or unsustainable in the future. And so, there isn’t anything more important.
How did you come to those criteria?
Our interpretation of the threat of climate change is in response to the IPCC analysis in a devastating report published towards the end of 2018. The Paris Agreement, in 2015 appeared to be a landmark, showing how the threatening figure of a 1.5 degree raise in temperature was something we could avoid. Contrary to all expectations in Paris, the 2018 IPCC report exposed the fact that a 1.5 degree raise is already a certainty, it will be reached, and it will be with us much sooner than we thought possible in Paris in 2015. We will be at 1.5 degrees before 2030.
Then in early 2019 the horrific intergovernmental biodiversity report showed that even if we reduce carbon emissions now, the problem will not be solved. In all the calculations up to and including Paris, it was assumed that reduction of carbon emissions to zero would then allow natural eco-systems to do what they have always done, and absorb carbon in the atmosphere. This report revealed that the destruction of eco-systems around the world has compromised their ability to absorb carbon as they used to. The Amazon Rain Forest for example, which was a vital carbon sink absorbing large amounts of carbon, has now turned into a net carbon emitter. At the same time, the need to absorb carbon is now greater than ever before. We are already above 400 particles per million of carbon dioxide in our atmosphere. For the last 11,000 years, we have never been above 300 particles. This has all happened in 60 years.
We are not going to solve this just by reducing carbon emissions. The report suggests that solving the problem of Climate Change will now only be successful if at least 40% of the actions taken include eco-system regeneration to recover the carbon absorbent characteristics in nature. If you take all of that seriously, 1.5-2 degrees is highly likely this decade, and 3-4 degrees by 2050. It will be incredibly difficult for many people on this planet to live under such circumstances. That is coming for us.
Once you’ve taken all of that on, all the investments we make have to be designed to address the carbon problem.
That’s how we developed our thinking at GAS. We had to work out a way of measuring the carbon impact of our portfolio companies. This was very difficult because so many companies were doing different things. We have now found and can apply our rigorous methodology.
Does this take precedence over criteria like being profitable?
At GAS we say that you are never going to make a difference to Climate Change if your business fails. And you are launching your business in a very capitalist and mature economy and that means that you will only be viable if you're profitable and survive in that economic environment.
We are intending to deliver profit for the planet. But profit for the planet will only be possible, if you deliver profit to our investors. The two have to go together.
How do your angels react to these criteria?
They like us – they come to us. They are pleased because they can see how serious our work is. They can see how much rigour and scrutiny there is in what we do, and consequently how much integrity.
Where do you find your dealflow?
It is UK wide and beyond. We have no problem finding dealflow, the entrepreneurs come to us. If you are an entrepreneur doing anything in Greentech and to reduce carbon emissions and you are looking for angel investing, you will find us.
What would you say are the most promising technologies at this moment you are looking out for?
Probably the biggest sector is energy, with its many sub sectors: energy generation, energy distribution (grid), energy management, energy trading, energy storage and energy efficiency.
I believe the most important area to sort out is residential heating, for which gas is used right now in the UK. It is a huge problem; it accounts for a significant degree of carbon emissions. We have to encourage new innovation to solve this.
Then there is hydrogen, which is promising and a possible solution for various industries. For example, it could be used for lorries, which in current technology are unable to be powered by electricity systems.
Then there is innovation in water management. Water is a crucial resource for human and all other life, we need the right technologies and processes to manage it without doing damage to the planet.
What are you looking for connecting to European angel networks and business angels?
I think our membership with Business Angels Europe provides us with 3 things:
We are very interested in landscape scanning to see what deals our fellow BAE Club members are looking at in terms of Greentech;
We would love European angels to join GAS. We would not in any sense want to steal members of course. But we know angels are part of various syndicates, and our group is very specialist;
Co-investors. We are always looking to co-invest in great deals.
What/who do you read to keep up to date on emerging trends and technologies?
What are some promising/exciting portfolio companies that you’d like to profile?
Piclo is a smart energy company that is making the UK’s electricity grids more efficient, reliable and sustainable. Piclo leverages the latest digital technology to develop an independent, online marketplace for trading energy flexibility. CEO and Co-Founder James Johnston first met Green Angel Syndicate at the Ecosummit in 2015 and discussed Piclo’s first product with them. The relationship developed and GAS invested in Piclo in 2018.
Naked Energy is a company looking at decarbonising heat and wants to put solar heating back on the map in the UK, following in the footsteps of Denmark, Germany and the Netherlands. They are revolutionising solar with a product called Virtu - the world’s highest energy density solar technology.