The UK clean tech sector has reclaimed its spot as the best funded in Europe, according to the findings of a new report.
Research conducted by the group Cleantech for UK has found that funding for the sector reached £7.2bn in 2025, up significantly from the £5.6bn raised the previous year.
This puts the UK firmly ahed of Germany, which has raised £1.7bn, and France, which raised £1.4bn.
According the research, from venture-backed equity alone, UK clean tech firms pulled in £2.5bn, surpassing the £1.9bn raised by firms in China.
“The UK has proven its global resilience, outperforming China, France, and Germany in venture-backed investment and reclaiming its spot as Europe’s clean tech powerhouse,” said Sarah Mackintosh, director of Cleantech for UK.
“However, this £7.2bn recovery is a ‘Hollow Peak’ – while the top-line figures look strong, they mask a retreat into ‘safe bets.’
“Capital is concentrating in software and late-stage companies, while the hardware-heavy startups that form the backbone of our future industrial strategy are being starved of oxygen.”
According the report, there has been a collapse in funding for early-stage innovators, which has reached a five-year low.
“A 50% collapse in early-stage deals is a flashing red light for the UK’s innovation pipeline,” said Mackintosh.
“If we don’t fix the ‘Valley of Death’ now, we will see a “lost generation of innovation” where British-born technologies are forced to scale in the US or EU simply because the UK lacks the commercialisation infrastructure to keep them. There is still time to act, but it must be now.”
Responding to the report revealing a sharp contraction in seed and Series A activity, Jonathan Pollock, managing partner at Elbow Beach said: “The UK’s cleantech pipeline is under pressure, even as record levels of growth capital continue to back our most successful companies.
“The opportunity, and necessity, is to rebuild focus on this critical stage of the funding journey.
“If we get this right, we can turn today’s imbalance into a strength: accelerating the path from breakthrough science to scaled industry, creating high-value jobs, and ensuring the UK captures a greater share of the economic upside from the energy and industrial transition.”
