Access to Finance for Cleantech Innovation and Investment: Evidence from U.K. Small- and Medium-Sized Enterprises

Clean technology (cleantech) is becoming increasingly important as firms and industries seek to address challenges around the global scarcity of resources and also achieve wider social and environmental goals. Yet there are underlying problems with how capital markets respond to this increasing demand for new and innovative cleantech investments. In this article, we use a large U.K. dataset to first consider the extent to which firms engaging with cleantech increase their demand for external capital. We then consider how different types of debt and equity financiers deal with this demand for funds. Our key findings are that: 1) businesses engaging with clean technologies have a higher demand for external capital and 2) these demands are not being fully met by traditional providers which forces firms to seek out alternative and nontraditional sources of finance.