Innovative Scottish entrepreneurs accelerating Net Zero

This is clearly a challenge for those tasked with getting us to that point, but it also presents a massive opportunity for innovators and start-ups in Scotland and beyond. If they can design and develop the required solutions, and have them adopted, the market for clean energy technologies will be huge and prosperity, jobs and a stronger economy will be created.

However, many of these fledgling companies require support in order to turn their plans and ideas into action. Building high growth start-ups is something of an uphill task in Scotland compared to other countries.

According to the Scottish Government, we lag behind comparable economies when it comes to indicators of entrepreneurial dynamism, particularly in business survival rate – 57 per cent of Scotland’s start-ups survived to three years and 42 per cent survived to five years, which is much lower than other advanced economies.

There is also a distinct gender gap when it comes to start-up founders in clean energy as well as other sectors, resulting in an undoubted constraint on ingenuity.  

Scotland’s Net Zero Technology Centre (NZTC) aims to boost the energy transition by helping high-potential, diverse start-ups grow and flourish through its TechX Clean Energy Accelerator programme. 

Mark Anderson, NZTC’s TechX Director, describes the organisation’s accelerator programme as being a “bootcamp for start-ups”. Participating companies are provided with a generous grant of up to £100,000, 15 weeks of expert mentorship and two years of specialised growth support to help them to progress further towards eventual commercialisation and beyond.

Mark Anderson, TechX Director, says there is a huge need for innovation

“Scotland’s future entrepreneurial landscape and net zero goal is dependent on innovation and start-ups in particular tend to drive this, accelerating new technologies that will enable us to cut back on greenhouse gas emissions. That is why support for emerging start-ups is essential during the transition to net zero; their ingenuity, passion and stamina will help us reach our goals.”

More often than not, start-up founders demonstrate a high degree of tenacity and commitment. Many take on significant personal risk and may forgo an employee’s salary in order to follow their passion and grow their business.

Lawrence Ellison, co-founder of Oracle, struggled to make the business a success initially, mortgaging his house to keep the firm afloat before it became one of the most successful technology companies in the world. Challenging, to say the least, as for every successful idea there are thousands that fail. But all this does is stimulate innovation; the need to discover something new that can leave lasting positive change. 

Reid Hoffman initially created the long forgotten SocialNet, an online dating and social networking site that lacked focus and clear purpose, and with no market appeal at the time, the site ultimately failed. Taking learnings from this, Hoffman went on to co-found LinkedIn which would revolutionise how business professionals and job seekers network and converse.

The lesson, entrepreneurs may fail fast, but they learn fast too, innovating until they find success. “Developing a new idea into a successful business can be really tough” says Mr Anderson. “It takes time, money and a lot of resilience. It’s a slow burn. 
“Founders often have a lot to learn and need the right support. From deciding on their business model, developing a technology that works, to discovering more about the needs and demand from potential customers. Building the right team is essential, as well as enticing equity investors to fund the business sufficiently.” 

Equity investment secured by Scottish businesses increased 36 per cent to £690 million in 2021, up from £509 million in 2020, and strong growth was seen for start-ups in deals under £10 million. While many investors still favour later stage companies, this encouragingly demonstrates that more early stage businesses are being seen as investable propositions by angel networks and venture capital firms. 

Delivering through diversity
“At NZTC our TechX Accelerator programme is looking for start-ups with their own defensible technology,” Mark Anderson says. “And we need to be convinced by the founder and the team – investors aren’t just looking at the technology solutions, they are investing in the people.

“They need to be credible and have what it takes to grow the company. If they don’t have the right skills, they need to have a plan to bring them onboard, which could present an opportunity to ensure diversity in their teams.” 

Evidence shows that while currently only 21 per cent of SME business are led by women, women-led businesses contribute more than £5 billion towards the Scottish economy. The gender gap in Scottish entrepreneurship presents a real need to increase the number of female company founders.

“For this year’s accelerator cohort, we set an aim for 30 per cent of shortlisted start-ups to be led by women, as CEO or another senior leader with an equity stake in the company. This led to over 40  per cent of the cohort being represented by female leaders or co-leaders. And as part of our programme, we offer a dedicated session on the tangible benefits of having a diverse team,” Mr Anderson says. 

Having a gender diverse company helps to widen viewpoints, it allows ideas to be developed from different perspectives, and it increases productivity.
Hiring people from a range of backgrounds increases the likelihood of employing the right person for the right job. Staff working as part of a diverse workforce tend to feel respected and valued, and are more likely to stay with the company, reducing recruitment and retention costs.

It has been documented that venture capitalists find higher returns on investment in women-led start-ups, with female-led companies generating 63% more value for investors than those male-led. 

“The gender gap in entrepreneurship, and particularly in the clean energy space, is not just a Scottish issue, but a global one”, says Mr Anderson. “In clean energy it comes back to education and the ratio of men and women in careers focused on science, technology, engineering and mathematics (STEM), subjects that are typically more male dominated. More focused support is required for female founders and minority groups in energy.”

Scotland is combatting this issue with the launch of a range of initiatives, including the likes of Mint Ventures, a women-led business angel investment club and network which works closely with Women’s Enterprise Scotland, and who are democratising angel investment for women.

The Scottish Government has also recently agreed to award £42 million to Codebase to establish seven ‘Tech Scaler Hubs’, centres for teaching entrepreneurship. Companies led by women will be prioritised for entry to the incubators, and given extra support. 

Scotland’s Cabinet Secretary for Finance and the Economy Kate Forbes has recently stated that “we cannot achieve our goals without entrepreneurs. New businesses are an important source of innovation – something that will be vital if we are to raise prosperity, while also addressing the climate crisis and other key issues.” 

As recognition sinks in that start-ups will be pivotal to Scotland’s future prosperity, and indeed, the future of energy, Scotland is following suit in offering a foundation for growth.  

Anderson says there is an opportunity to bring more than 12 companies a year through NZTC’s TechX Clean Energy Accelerator programme. “We feel more companies can grow through accelerator initiatives such as ours. We see first-hand the results. We have supported a range of game-changing technologies that can help enable clean and affordable energy, reduce carbon emissions and help Scotland achieve its goals. 

“After graduating from the programme, most TechX start-ups benefit from an enhanced network, allowing them to grasp more opportunities such as field trials, securing partnerships and further investment that fast-track their growth. 

“Clean energy start-ups will bring economic benefit to Scotland and significantly help in the fight against climate change. As a country, we have an opportunity to become a clean energy powerhouse, and start-ups have a key role to play in this.”

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Programme surfs a wave of success

Start-ups that have been through NZTC’s TechX Clean Energy Accelerator programme are now taking strides towards developing and commercialising novel technologies and solutions, with every likelihood they will succeed.

“So far we’ve had 45 companies go through the programme since 2018 and 43 of them are still trading” confirms Anderson. “The general rule with start-ups is that some 90 per cent fail. In our case, we have seen the reverse of that.”

Mocean Energy’s prototype is undergoing trials off Orkney

One example is Edinburgh-based Mocean Energy. The firm was part of the second cohort of businesses to graduate from the accelerator in 2019. It has now developed its technology from a concept model to the 20 metre long, 38 tonne Blue X wave power generator, which was trialled off the coast of Orkney.

This structure is designed to capture energy from ocean waves and provide a predictable source of green energy that can help to decarbonise North Sea oil and gas infrastructure.

“They are doing really, really well,” says Anderson. “One of the great things about Mocean Energy’s wave device is that it can be installed close to an oil and gas platform and power it directly with green electricity.”

Start-ups graduating from the TechX Clean Energy Accelerator have a unique opportunity to continue their development by applying for field trials with NZTC and industry support.

In 2021 Mocean Energy started a £1.6 million project with the Net Zero Technology Centre, Harbour Energy, EC-OG and Modus to demonstrate the potential of its Blue X wave energy prototype to power a subsea battery and a remote underwater vehicle.

Mocean Energy, which started as a team of six, now has 18 employees, and last year opened a new office in Aberdeen to meet industry demand. “We continue to work with Mocean Energy and they are taking steady steps towards commercialisation, which is something that takes time. 

“It’s a great example of how Scottish companies with the right support and exposure can prosper.”

Another graduate from the TechX Clean Energy Accelerator programme is Glasgow-based Napkin Innovation (formerly Cedeco). Its Founder and Director, Jacqueline Morrison, is a previous winner of the InnovateUK Women in Innovation Award.

The company has found a novel method of fixing offshore wind turbines to the seabed. “It’s a cheaper and lower carbon way compared to traditional methods,” Anderson explains. “In essence, it’s an alternative to grout, which is cement based and produces high emissions.”

The new Napkin Innovation technology shows a potential reduction of up to 40 per cent of carbon emissions compared to current methods when installing 100 offshore wind turbines. 

Anderson continues; “The company is at an early stage but the promise it offers is exciting.

“Offshore wind offers huge growth potential and presents a massive opportunity for Napkin. Another Scottish clean energy start-up on track to achieve great things.” 

Founded in 2017, the Net Zero Technology Centre was created as part of the Aberdeen City Region Deal, with £180 million of UK and Scottish government funding to maximise the potential of the North Sea.

To date the centre has co-invested £211 million in technologies which have the potential to generate £10-15 billion in gross value added to the Scottish economy, screened more than 1,560 technologies, completed 168 field trials, progressed more than 29 technologies to commercialisation and supported 45 tech start-ups.