"Having a green reason isn't enough anymore": What UK’s largest climate angel network is looking for going into 2025

When Hugh Bartlett gauges the sentiment among climate tech investors going into 2025, he sees a full spectrum ranging from optimism to pessimism to "everything in between".

But there’s one thing that seems certain: Companies who are expecting customers to pay a green premium for their products could struggle to find investment in a difficult economic climate.

“I think the big change from four years ago to now is that the individual sentiment to make a bigger sacrifice to pick the green premium has almost disappeared,” says Bartlett, the Senior Investment Executive at Green Angel Syndicate, the UK’s largest network of climate investors. “And companies that ask for a green premium are really struggling.”

The Green Angel Syndicate has a network of around 350 private investors looking to put their money into impact startups. The syndicate screens around 1,000 companies per year, with about 7-10 of those getting investment. So far the Green Angels have invested about £45m (€55m), usually in the seed or Series A phase, with a current portfolio of 45 companies across sectors like energy, transport, food and carbon removal.

And Bartlett’s advice to companies who are looking for funding is simple: Do everything you can to make sure your solution will benefit the bottom line as well as the environment.

“Just having a green reason to do something isn't really enough anymore. I think that’s the sad reality of where we’re at,” Bartlett says. “So when I’m looking at companies now, what I’m steering them towards is paying close attention to driving down costs.”

That’s especially true for companies who are pitching their solutions to larger corporations.

“Two years ago, you could kind of get in through the CSO [Chief Sustainability Officer], and they would bring it in through the board. Now you need to be pitching the CFO or financial director as well,” Bartlett says.

One notable exception when it comes to corporate willingness to pay extra for green solutions is the fashion industry, which Bartlett also sees as one of the hottest sectors for impact startups.

“Fashion is such an interesting sector because there's such a desire to make a difference in it,” Bartlett says. “That's where I think a lot of big-name brands are really willing to back small companies and even put in money, which I think is hugely reassuring.”

Not all startups need AI to be relevant

Other trending climate-tech sectors going into 2025 include materials, hardware, food tech and – of course – AI.

But Bartlett also issued a warning for startups who are trying to cram AI into their business model simply because they think they have to.

“Companies often approach us and they kind of know that there is an optimisation piece that AI may well lend itself to. I’m always hesitant, though, to endorse that because far too often I see companies that either don't know their company well enough or don't know about AI well enough. And so they either say they’re going to implement AI and actually they aren’t suited for it at all, or they don't really know what they're going to do with AI. Or they are just putting it in there to attract attention because they know there's a lot of money going into that. I don't think that every company needs to put in AI somewhere to be relevant.”

A 'glorified dating agency' for investors

The Green Angel Syndicate focuses on finding investors who can contribute more than just money. Many of their members are former executives in the energy and industry sectors, or former startup founders who are now wanting to support a younger generation.

The syndicate has frequent pitch events where some of the companies who have passed the screening process are invited to present their solutions directly to investors.

“In some ways we are a glorified dating agency in that we have investors on one side who are cash-rich and time-poor, and startups on the other side who are idea-rich and cash-poor,” Bartlett says. “And we filter out the best ideas and put them to our members. We do the leg work and the due diligence and put together the investment thesis. It’s our job to know what the best companies are.”

One of the biggest benefits of an angel syndicate, he adds, is the ability of investors to use their own industry connections and experience to make introductions and give advice to founders.

“It really is like a Dragon's Den kind of role. A huge proportion of our portfolio companies get input in that way. And I think that’s different from a VC, where they mostly have a background in the finance side of things and have less industry experience,” Bartlett says. “My saying is that a good investor should have a good checkbook, a good contact book and a good CV – what experience do they have to help in the long run and what kind of battle scars have they worn?”

Myths about angel investing

One challenge, though, is finding investors with their own experience in relatively new sectors like ag-tech, food tech and green fashion – simply because there aren’t that many ex-founders in those spaces yet.

Emma Mee, Green Angel's Head of Membership who is recruiting new investors to the syndicate, says there are also a lot of misconceptions and “myths” about who can become an angel investor.

“People think you have to be a multi-millionaire and invest loads of time and effort and be – let’s be honest – a male board member who is good at cracking the whip,” she says. “And I think that puts a lot of people off. Actually some really good angel investors are people with hard-won experience and they can easily be female. And they can easily be engaged in a way that suits their lifestyle and gives them purpose, if their day job is something that pays well but doesn’t necessarily give them a warm, fuzzy feeling at night.”

So what kind of company would Bartlett like to see more of in 2025?

He says the aviation industry still offers plenty of opportunities for startups who can either find ways of making lighter materials or more sustainable fuel.

“If you can make a plane a lot lighter, that’s an awful big incentive for aviation companies,” Bartlett says. “And when we’re striving for interesting, radical things to change the world, I think aviation would be a really interesting one.”