Why we chose the UK as our first outpost for electrification and decarbonization of Europe
Introduction
The journey to decarbonization and electrification represents crucial action toward humanity’s need for energy transformation and greater sustainability. To face the complex and high stakes issues limiting progress demands a global commitment from all of us — to bring the best and brightest minds, thoughts, and ideas together as well as to drive true innovation through collaboration and tireless effort.
As a key player in the global community, Europe has been — and continues to be — a beacon in the world’s journey towards both decarbonization, championing ambitious goals like reducing greenhouse gas emissions by 55% by 2030, and reaching net-zero emissions by 2050. As a symbol of promise and possibility, it also showcases the powerful convergence of environmental responsibility and economic prosperity [1]. The International Renewable Energy Agency’s research projects that global economic decarbonization could lead to the creation of up to 28-million new jobs by 2050. These, among other, compelling dynamics have inspired TDK Ventures to broaden our horizons, and seek to further engage and connect the global community by aligning our investments with Europe’s transformative energy journey [2]. Key to this, we’ve launched Fund EX1, dedicated to driving Energy Transformation (EX) in no small way by complementing our ongoing U.S. investments with investments in European innovation.
Figure 1. Climate and energy deeptech have both seen accelerating investment trends over the past decade with Europe being a top contributor [3].
Choosing our first outpost in Europe was a significant decision. We needed a location that was not only innovative and dynamic, but also just as deeply committed to environmental change. After thorough research and meticulous analysis, the United Kingdom stood out, marking the ideal starting point for our European endeavors. In this article, we’ll walk through exactly how the UK became our choice.
A Global Connection Hub
The UK offers incredible connectivity to the rest of Europe. A journey of 4 hours or less can reach most major European cities by either train for plane — including Paris, Amsterdam, Brussels, Dublin, Berlin, Munich, Zurich, Rome, Vienna, and many more. Direct flights also regularly connect London to the San Francisco Bay Area, home of TDK Ventures. This remarkable accessibility fosters an environment of collaboration and exchange, enabling the seamless flow of ideas and innovations [4].
Coupled with its connectivity, the UK boasts a vibrant startup ecosystem, particularly in climate tech. With England (23%, mostly London) leading as the place where the highest quantity of VC funds are raised, the UK is a buzzing hub of innovation and entrepreneurial spirit. By the numbers, London stands second only to San Francisco in terms of the count of climate tech companies and is in the global top 5 for investor count (see Figure 2).
Figure 2. England represents almost a quarter of all VC deals and the location for startups [3].
Analysis from Dealroom’s 2022 data shows that the distribution of “generalist” unicorns across Europe appears in hubs like London, which differentiates itself further as a science and research hub (think Cambridge, Oxford), as well as trailblazing tech development [5].
Further bolstering its appeal, the UK government has demonstrated impressive commitment to the climate tech sector, most notably through the formation of the Advanced Research & Invention Agency (ARIA). Reminiscent of the successful ARPA-E model in the U.S., ARIA offers a dynamic platform for the swift identification and funding of transformational science and technology. This institutional support provides a strong wind in the sails of innovators and entrepreneurs, propelling the advancement of climate tech [6].
Key Indicators for Success
These facts alone provided strong support for a UK location. However, the site of our first European outpost was decided on a five-parameter system to assess the innovation ecosystem:
1. Investor Ecosystem: Our points system awarded up to five points based on early-stage investors’ presence, late-stage investors, access to public markets, density of networking events, and more. à The UK scored impressively, boasting a thriving investor scene, access to strong public markets for potential venture-style exits, and robust networking opportunities.
2. Academic Ecosystem: We awarded up to four points based on the presence of leading technical universities, business universities, university-tied accelerators, and ‘unicorn’ startups from academia. à The UK, with its prestigious institutions like Oxford, Cambridge University, Imperial College, to name a few, and close ties between academia and business, excelled in this category.
3. Travel Interconnection: This was gauged on the basis of accessibility to major European cities and regular direct flights to the San Francisco Bay Area. àThe UK’s geographic location and excellent transport links made it an attractive choice.
4. Access to Talent: The availability of technical talent interested in entrepreneurship, traditional talent from PE/corporate sectors interested in entrepreneurship, and VC/founder talent looking to grow, all factored into our scoring system. à Here too, the UK’s rich talent pool and entrepreneurial spirit shone.
5. Ease of Doing Business: This includes aspects like investor-friendly board structures, legal and tax simplicity, and low language barriers. à The UK’s business-friendly environment secured it high points.
Choosing an outpost was much more than a business strategy. By establishing our first European outpost in the UK, we’re also announcing our commitment to a larger vision: the growth and nurturing of startups in the climate innovation ecosystem, from the nascent stages of an idea to full-fledged market impact. This decision isn’t just about TDK Ventures — it’s about the entrepreneurs, the innovators, the dreamers and doers, who, with the right support and network, can change the world. In the spirit of African wisdom, “If you want to go fast, go alone. If you want to go far, go together.” As we begin our journey in the UK with TDK Ventures, we aspire to go far. We’re here to build connections, grow collaborations, and foster a greater European community united by sustainable energy transformation principles. We genuinely believe that the collective strength of this community will be a driving force in achieving the ambitious environmental goals we all share.
The creation of Fund EX1 is a new chapter for TDK Ventures and a reaffirmation of our commitment to the transformative power of deep tech. By nurturing the rich ecosystem of innovators and entrepreneurs in the UK, we aspire to tap into the abundance of potential this region holds, and scale the impact within the European investment ecosystem. As always, TDK Ventures’ support isn’t limited to monetary investment alone. We aim to provide mentorship, support, and guidance to the pioneers of tomorrow, empowering them to dream big and make those dreams a reality. We’ve had the privilege to work with some of the most incredible people in the word in an effort to move the needle on EX technical progress, and we strive to do the same through our UK outpost.
As we embark on this journey in the UK, we invite you to join us, because together, we can make a difference. It’s not just about us; it’s about all of us, collectively moving towards a sustainable future.
References:
[1] How the European Union could achieve net-zero emissions at net-zero cost. (2020, December 3). Retrieved from https://www.mckinsey.com/capabilities/sustainability/our-insights/how-the-european-union-could-achieve-net-zero-emissions-at-net-zero-cost
[2] An updated roadmap to net zero emissions by 2050 — World energy outlook 2022 — Analysis. (n.d.). Retrieved from https://www.iea.org/reports/world-energy-outlook-2022/an-updated-roadmap-to-net-zero-emissions-by-2050
[3] Retrieved from https://pitchbook.com/
[4] Isochrone map for train travel from London. (n.d.). Retrieved from https://emptypipes.org/supp/isochrone_london/
[5] Identify promising companies before everyone else. (2023, May 16). Retrieved from https://dealroom.co/
[6] Blog post | Former ARPA-E program director Dr. Ilan Gur to lead new UK science agency. (n.d.). Retrieved from https://arpa-e.energy.gov/news-and-media/blog-posts/former-arpa-e-program-director-dr-ilan-gur-lead-new-uk-science-agency