The proportion of UK-based small businesses targeting the growing international market for low-carbon products has doubled in the past two years, according to research by Shell Springboard and UK government-backed nonprofit the Carbon Trust.
Some 76 percent of low-carbon small businesses plan to enter or expand exports to a new market in the next two years, compared to 37 percent that were planning to enter new export markets in a Carbon Trust survey in 2011, according to Low Carbon Entrepreneurs: The New Engines for Growth.
Almost two in five such small enterprises have already entered foreign markets with new low-carbon technologies — making startups in the low-carbon sector almost twice as likely to have secured export deals as small businesses in other industries. Moreover, three-quarters of small low-carbon enterprises plan to expand into new markets in the next 24 months.
The US (15 percent) and Germany (12 percent) emerged as the most popular export markets among a diverse range of countries. China, India, Australia, the Middle East, Canada and South America were among the top destinations companies plan to expand into over the next two years.
An analysis of almost 2,000 low carbon small businesses pinpointed London, Oxford, Cambridge, Leeds and Southampton as the UK’s leading hubs for low-carbon innovation. Relative to population size, Derbyshire and Nottinghamshire also had high proportions of low-carbon small businesses — with access to talent and regional funding emerging as key reasons that drive business location.
However, despite these successes, the sector is not without its challenges, the Carbon Trust says. Chief among these are access to funding, technology demonstration opportunities and securing the right skills.
Low-carbon small businesses see funding as the largest hurdle to growth, the report says. Early-stage venture capital investment activity has dropped in the UK since peaking in 2008. Both the total amount of funding invested and the number of deals are declining. This puts pressure on low carbon small businesses to identify alternative sources of funding.
However, 79 percent of low-carbon entrepreneurs in the UK are already putting their own money into their venture, based on online survey results, and 29 percent are already raising funding from friends and family. Some 54 percent of low-carbon small businesses have received government grants to help fund their business and 21.5 percent receive financial awards or prizes, the survey shows.