UK government launches £125m Environmental Innovation Fund

The government has today formally launched the UK Innovation Investment Fund (UKIIF), with the first closing of a new £125m fund for investing in cutting-edge environmental technologies.

The UKIIF was announced last June and was followed by the appointment of Hermes Private Equity and the European Investment Fund as managers for two new funds, one focusing on low carbon technologies and the other addressing life sciences, low carbon, digital technology and advanced manufacturing.

The Department of Business, Innovation and Skills announced today that it has closed the first round of funding for the Hermes Environmental Innovation Fund, raising £125m, including £50m of government funding and £75m from private sector investors.

The new fund will now begin investing in small growing businesses, startups and spinouts, including pre-profit and pre-revenue stages of development that are primarily focused on improving resource efficiency.

Hermes Private Equity chief executive Susan Flynn said the company had already identified a number of investment opportunities and expected to begin deploying capital soon.

"At this stage in the economic cycle, there are many forward-looking companies that may not have funding available to them," she added. "The Hermes Private Equity Environmental Innovation Fund (HPEEIF) will ensure that those seeking finance for promising new environmental ventures will have access to a source of funding."

Science and innovation minister Lord Drayson said the new fund would provide a boost to clean tech entrepreneurs over the next few years.

"Investment has flowed into the UKIIF at extraordinary speed," he said. " It's already one of the largest European funds for investing in high-tech firms. But what's more important is rapidly channelling that capital into Britain's burgeoning green tech sector. After a tough spell, things are looking up for our entrepreneurs and innovators."