Expanding the green jobs sector – a quest to upskill the next generation
For young people to plan the green careers we need to achieve net zero, we need support in the form of financial incentives and wider access to information. Nesta Impact Investments are interested in investing in ventures supporting people to and companies to get the green skills required to make the transition to net zero.
The UK has a shortage of green skills. This shortfall is one of the most important – and most underestimated – barriers to reaching net-zero carbon emissions. We can’t all switch to heat pumps or electric vehicles if we don’t have enough people with the skills to make them work. The lack of green skills also holds back the economy – we know that green jobs are generally more productive and highly paid than other jobs, so there’s a strong case for filling them.
Encouraging more people to train in green skills is a challenge the Behavioural Insight Team and Nesta tried to find solutions for in our latest research.
We ran an online experiment with just over 8,000 people – half of them current or recent students soon to begin their careers, half of them people who are already in the world of work – to understand how likely they’d be to take a green training course under different circumstances. In particular, we tested the impact of different framings – how we described the green training – and financial incentives – offering people different kinds of payment or loan for taking the training.
There were two striking results from the experiment. First, a large number of people expressed interest in green training courses, with around half of all participants saying they were interested, regardless of what framing we showed them. Second, financial incentives to train make a big difference. For all three of the financial incentives we tested – a grant, a subsidy and a loan – interest in green training roughly doubled compared to our control (where no financial incentive was on offer). That suggests money is a very important factor.
Our results suggest there is a very strong case for offering financial help to people to take on green training courses. There are various ways this could be done.
One is for governments to offer payments to those who complete green training courses – either as a grant payment or a subsidy on the cost of the course. There is precedent for doing this, such as the cash payments that are often offered to trainee teachers. Focusing payments on sectors with immediate skills shortages could make this especially effective. Indeed, the UK government is currently offering subsidies on the cost of training as a heat pump engineer, a skill set the country is currently very short of.
Another option might be for employers to offer payments to those who take up green training, in return for trainees committing to work for the company for a period of time. This practice, sometimes known as a golden hello, is a relatively common tactic for industries facing skills shortages.
While offering these payments for green training sounds expensive, it may not be that large compared to other options. On heat pumps, for example, the Government is offering £5,000 for every heat pump installed in England and Wales. The subsidy for training heat pump engineers is just £500 – and each one of these trainees could go on to install a large number of heat pumps. For private companies, upfront incentive payments are likely to be small in the context of overall employment costs, particularly given the wage pressures facing the economy.
But if upfront payments are too expensive, there is another option which seems to work almost as well: loans for green training. Loans for education and training is sometimes a contentious topic, but the logic behind offering loans for green skills is strong: re-training for a green job has a good chance of increasing income, which helps to pay off the loan.
There are already companies offering loans for training, such as Student Finance, Stepex and Knoma. Our research suggests extending this type of offer into the green skills space could prove very beneficial.
Aside from the financial incentives, there are a couple of other big issues that we need to address on green skills. The first is that there seems to be a lack of green training courses on offer. There are noble exceptions, such as the Sustainability Masters at Cranfield University, but for the most part when we have spoken to organisations working on green skills, they have drawn a blank on who actually offers courses on green skills. There is not much point in incentivising people to take green training courses if those courses don’t exist. So our message to training providers of all sorts – colleges, universities, private companies – is that there seems to be a big gap on green skills where a big, lucrative market should be.
Second, we need to do more on helping people – especially young people – plan successful green careers. Many people who are interested in doing green jobs don’t know what green jobs are actually available, or what skills and experience they need to secure those jobs. You can’t easily acquire green skills if you don’t know what skills you need. There are some interesting companies taking up this task, such as Greenworkx and Connectr.
The good news is that our research shows a very clear route to tackling the green skills shortage. We need more green training courses, better green careers advice and financial help for people taking on green training. The benefits of doing this should be significant – for workers, employers, the economy and the climate – and so it’s time for government, businesses and training providers to make it happen.
Intentionality and Innovation
Nesta Impact Investments were interviewed for the recent Taylor Vinters Report, Impact Investment, Intentionality and Innovation.
Impact Investor’s Profile of Lisa Barclay and the Nesta Impact Investment team.
Profile: Nesta’s Barclay on investing in innovation for social good
Written by:
Christopher Walker
Published on: June 14 2022
A fairer start for every child, a healthy life for all, and a sustainable future. Those are the key impact themes behind the UK’s national endowment Nesta’s new investment strategy, as Lisa Barclay explains
Lisa Barclay, Nesta: “We are looking for businesses that combine commercial potential with a thematic impact.”
Strategy consulting and public policy roles 1993 – 2000
MA, Cambridge, Social and Political Sciences/Economics 1990-93
MBA, London Business School 2002-04
Created in 1998 with an initial £250m (€292m) of National Lottery funding, Nesta is the UK’s first-ever publicly supported national endowment.
It was the idea of Oscar-winning film producer David Puttnam, who felt the country was failing to capitalise on its talent for innovation and invention. The initial funding was later supplement, in 2006, with a further £75m of lottery money, drawn down over five years.
As the executive director for investments, Lisa Barclay is responsible for finding early-stage technology ventures with social or environmental impact. Barclay has worked in the impact investment industry for twenty years, before “it was even called impact, starting with my time at Bridges Fund Management“, she says.
Barclay followed this up at Social Finance where she developed outcomes-based investment models that levered private finance to government programmes, with investors being paid on the basis of successful results. “But I was itching to get back to direct investing. The work I do now is very similar to the work I did at Bridges.”
Nesta has £120m of assets under management. “Since the early 2000s, we have made 137 investments across our portfolio. 34 companies are in our three arts investment funds. 61 companies and six funds are in our legacy venture portfolios investing in deep-tech commercialisation. And finally, 36 companies are in our current impact ventures portfolio. Of all these, 37 are still active.”
Nesta manages four funds which have third party participation. Three of them are in the area of the arts, and the fourth is their impact investing fund, Nesta Impact Ventures. These are only open to institutional investors, which currently include a number of foundations and Big Society Capital.
Investment process
The criteria Barclay’s team employs to choose businesses to invest are “very much what you would expect from most venture capital teams. The key selection criteria are based on an assessment of the size of market, the quality of the management team, commercial potential of a particular proposition, and asking the question “is there a moat?” (i.e. barriers to entry).
She adds: “The main difference is that we are looking for businesses that combine commercial potential with a thematic impact. We tend to look at recent startups that align with our themes, particularly those which have raised less than £3m and are looking to have a raise soon.”
Barclay’s investment team is fairly small, consisting of just ten people. But she notes “it sits alongside some 250 other colleagues who are working on the same themes as we are. We are able to harness the specialist knowledge that they have developed and their extraordinary networks. They are essentially looking through a public policy lens, whereas we are more focused on private sector innovation”.
Thanks to this broader organisation, the Nesta investment team has developed deep expertise in certain areas. “We are able to bring to bear our team’s knowledge of data and behavioural science and the use of technology to help our companies accelerate their impact and commercial success.”
She says: “Our normal investment size is between £500,000 and £1m. We are providing seeding or early stage capital, but we do often follow on to support investments up to £4m.”
An example of the latter is Third Space Learning. This provides one-to-one tutoring for primary school pupils using graduates in South Asia and linking them virtually with UK pupils. Barclays says: “This has been hugely successful during the period of COVID and afterwards.”
Key themes
Nesta’s broad mandate, to commercialise innovation generally, ended when Ravi Gurumurthy was appointed chief executive, in December 2019.
Barclay explains: “When Ravi joined Nesta, he felt that the organisation was doing a lot of good things but was in need of more focus.”
After carrying out a strategic review, Gurumurthy selected three main areas of focus: a fairer start for every child by bridging the education attainment gap, a healthy life for all by tackling obesity, and a sustainable future. “Everything we do at Nesta is now focused on these three goals,” Barclay notes.
There are some exceptions in areas where historic activity continues, such as working with organisations seeking impact in the arts world. Nesta recently partnered with London’s National Gallery to deliver HOME-Zero, a creative R&D project to help raise awareness of household emissions and climate change. “But in future, we’ll try to orientate this towards the three goals that Ravi has indicated.”
Barclay’s team have been delivering on the new strategy since the middle of 2021 and so far, they have made “two mission-aligned investments”.
In the core focus area of obesity, Nesta’s aim is to halve the prevalence of obesity by 2030. “This would increase healthy life expectancy by an average of nearly two years for around ten million people in the UK, while narrowing health inequalities between the richest and poorest in society,” according to the organisation.
Nesta has invested in a very early-stage life sciences company which is developing capsules that suppress appetite but can be easily flushed out of the body naturally. These have the advantage of offering weight loss to obese people without the necessity for surgery.
The second investment is in the area of education. Here, Nesta’s “mission is to narrow the outcome gap between children growing up in disadvantage and the national average”.
Barclays says: “We have invested in a business that has been set up to improve the accessibility and affordability of quality childcare. The business matches families with carers and has created a suite of tools to essentially reinvent childminding with technology at its core.”
Challenges and the future
COVID was a challenge for Nesta as for all organisations “but given that a lot of our businesses are digital businesses in health and education, many of them actually thrived. Others needed some support, but we saw good resilience and creativity”.
“We don’t know what the economic headwinds will be going forwards and how this will affect the availability of new investments.” There may also be new areas of focus added, Nesta describes tackling loneliness as “an area of exploration”.
Barclay concludes: “It is still early days in our investment strategy, but we are excited about this new focus and are very much ‘full speed ahead’ looking for new investments in all three core areas. There is a huge amount that venture capital can bring to impact there.”
Investments leads £1.5 million investment round in Q doctor
Funding comes at a critical time to enable Q doctor to ramp up support for NHS during the COVID-19 pandemic
The Q doctor platform enables greater virtual access to NHS care in GP practices, hospitals, and the community via 111 and community clinics, helping to keep patients and clinicians safe
Q doctor works with the largest urgent care providers nationwide and an NHS Digital approved supplier for video consultation
Social impact investor Nesta Impact Investments (NII), part of Nesta, has led a £1.5m growth funding round in Q doctor, a rapidly growing healthcare technology platform that is helping the NHS to deliver patient-centred care. Nesta’s investment was made alongside key angel investors and retail investors represented by Seedrs and comes at a critical time to enable Q doctor to support the NHS in responding to COVID-19.
Q doctor provides hundreds of NHS GP practices, urgent care providers and hospitals with the technology needed to have safe, secure, easy to use video consultations with patients. Having recently been approved by NHS Digital for video consultation in two different centrally funded fast tracks, in response to COVID-19, Q doctor is scaling at pace to meet the demand and is now available to 25 million patients. This fresh capital will be used to scale Q doctor’s reach and impact in the UK by strengthening its product development and business efforts. The investment is the latest addition to NII’s healthcare portfolio and forms part of the strategy to invest in products and services that use patient-centred solutions to help improve health outcomes in the UK.
Manish Miglani, Healthcare Lead at Nesta Impact Investments, and who will join the Q doctor Board, said,
“Nesta’s health investment activity focuses on innovative and scalable technologies that improve health outcomes, reduce health inequalities, and help patients get more tailored care. Q doctor already assists NHS clinicians and patients by integrating with existing NHS systems, rather than seeking to replace NHS GP services: this was key to our investment decision. We are excited to have led this very significant investment round, particularly at this pressing time, and look forward to supporting Q doctor’s scale-up plans.”
Chris Whittle, Founder and Chief Executive Officer of Q doctor added,
“I am delighted to have completed our funding round led by Nesta Impact Investments and being able to bring in pro-NHS individuals at the same time via Seedrs. Q doctor has achieved national firsts in supporting 111, outpatient departments, hundreds of GP practices, and most recently London’s first COVID-19 Isolation Centre at Heathrow. Our solution, from a clinically led company, is tried and tested across the NHS; this funding is well timed to resource our rapid growth, as we support the NHS through the COVID-19 crisis at scale”.
Empiribox Ltd raises £2m funding to support primary teachers to deliver inspiring practical science lessons online
Social impact investor Nesta Impact Investments (NII), part of Nesta, and London-based investment manager, Downing LLP, have led a £2m growth funding round in Empiribox Ltd. The rapidly growing science education provider supplies resources for primary school teachers to teach practical science lessons.
Empiribox subscribers are sent science equipment, lesson and assessment resources and professional development plans for teachers. As teachers are forced to adapt quickly to teaching remotely during the COVID-19 outbreak, the investment will help Empiribox to launch its new online platform to engage students with exciting and practical science lessons from afar.
The new digital ‘Empiribox @ Home’ service will provide interactive videos, worksheets, quizzes and hands-on experiments allowing impactful science education to take place from home. This new product will serve as an add-on to the existing subscription service and as a stand-alone service that will be free for use by registered users during the Summer Term.
Nesta and Downing’s investment will enable Empiribox Ltd to tackle the UK’s persistent STEM skills gap by capturing the imaginations of students at a time when science education is needed more than ever to address global challenges such as climate change, health pandemics and resource conservation.
Empiribox aligns to the national curriculum, inspires children of all ages and saves time for primary school teachers. Its mission is to ensure young pupils experience the excitement of science, are equipped with the best building blocks for future science education and are ultimately encouraged to study science subjects past the age of compulsory education.
Manish Miglani, Education Lead at Nesta Impact Investments, who has joined the Empiribox Board, said,
“Nesta’s education investment activity focuses on innovative and scalable solutions that improve education outcomes, whilst reducing education inequalities through access to resources.
“We are excited to have taken part in this significant growth round and look forward to seeing the expansion of Empiribox’s digital and classroom science offerings and its ongoing growth.”
Mike Kennedy, Portfolio Director at Downing LLP, who has also joined the Empiribox board added,
“We are thrilled to have participated in this funding round alongside Nesta Impact Investments to facilitate what we see as a critical investment in the future of STEM related business and research. Working with businesses everywhere, we recognise the lack of adequately experienced applicants for manufacturing, research and technology posts – so many of which will require an education or qualifications in science – so we are unreservedly passionate about assisting companies like Empiribox in their mission. We see the opportunity for Empiribox to grow its user base exponentially, break into new markets and really influence the education outcomes for pupils everywhere. We look forward to working with Empiribox in this exciting new phase.”
Richard McGrath, CEO of Empiribox Ltd said,
“I am delighted to have completed our funding round with Downing LLP and Nesta Impact Investments. At Empiribox, we have worked tirelessly to bring hands-on, exciting and impactful science education to primary pupils. We know what we do makes a real difference to our pupils in preparing them for future careers, and our teachers, in assisting them to deliver the very best practical science lessons possible.
“We now have the opportunity to support science in primary schools through our in-school and our new Empiribox @ Home service. Having both available for use by schools and home learners is incredibly important during these difficult times. We are here to make a difference, and this funding round will make a massive impact on our ability to deliver these goals.”
BibliU Raises $10 Million to Empower Remote Learning for Students in the U.K. and the U.S.
BibliU, a digital learning platform that makes textbooks and reading materials more accessible than ever before, has secured $10 million in a Series A equity round. The investment was led by Nesta Impact Investments and included Guinness Asset Management, direct investment clients of Stonehage Fleming and ClearlySo. Nesta is the leading European early stage edtech investor which backs mission focussed businesses that seek both a social and financial return, including those which empower learners, teachers and learning institutions to make more effective use of technology and data.
Our world has changed drastically in the past few months, giving way to a generation of students demanding a level playing field regardless of their needs, and expecting their education providers to use digital services to meet them. Whether those needs are as a result of remote learning or accessibility, BibliU endeavors to deliver their class-leading content platform to more universities in the United Kingdom and the United States.
“As a student at Oxford and the University of Western Australia, I would’ve loved to have had access to this content online for free. That’s why I founded BibliU and I’m proud to say we’ve addressed that for hundreds of thousands of students at our partner universities. We’re investing in our team and continuing to develop our institutional delivery tools. I’m also thrilled to have Sean Devine joining our board as Chairman, his experience as CEO and President of CourseSmart and Safari Books Online brings invaluable industry experience to our team.” Dave Sherwood, CEO of BibliU said. “BibliU is proud to be an innovator for higher education, building an accessible solution for modern students – ensuring that amidst a growing necessity for remote education – textbooks and research materials are accessible to every student.”
BibliU will continue to invest in the digital transformation of higher education institutions, offering access to all varieties of tertiary reading content, enhanced by a first of its kind institution-wide search algorithm that empowers students to find the answers they are looking for in seconds. Its partnership with Coventry University created Europe’s largest digital content program and demonstrates BibliU’s commitment to building a digital library environment that provides accessible education and resources to every student. BibliU works with a growing list of universities, including Oxford, Imperial, University of Lincoln and more than 40% of universities in the U.K.
Oxford Sciences Innovation, BibliU’s original investor, will remain on the board and will be joined by Lisa Barclay from Nesta, offering 15 years of impact investment experience, and Sean Devine as Chairman.
“Now more than ever before, education institutions have the opportunity to harness technology to deliver new ways of learning. Nesta is delighted to be investing in BibliU, to support equal access to course materials for all students.” Lisa Barclay, Investment Director at Nesta, said.
ProFinda Receives £1m Nesta Investment
ProFinda has received one million pounds of funding from Nesta Impact Investments, the venture capital arm of one of the UK’s leading innovation foundations, to accelerate the deployment of its platform across the private, public and third sector, and increase social impact.
Nesta Impact Investments supports businesses like ProFinda which have the potential to deliver clear social impact as a part of their business model.
ProFinda’s mission is to revolutionise how organisations and their supply chains of people assess, identify and develop the skills, knowledge and capabilities of the people involved with them.
The Nesta investment will be used to:
build on success with blue chip clients and partners
make its technology available to non-profits
improve it proprietary skills machine learning IP
ProFinda’s ground-breaking technology uses a machine learning platform to build a dynamic and detailed map to far better understand the skills and knowledge of the total workforce. This is based on a skills ‘ontology’, which utilises tools such as semantic parsing and matching to dramatically increase understanding of skills. It is part of a new category of workforce optimisation technology that is becoming essential for organisations wishing to be more adaptive and agile.
This “science of skills” enables organisations to improve how they leverage the skills of their collective workforce, including internal employees, contractors and alumni. It intelligently matches project requirements to ability and knowledge.
Nesta supports innovation in building the workforce of the future, skills, and developing the ‘collective intelligence’, where technology unlocks human potential and improves collaborative working. This focus is essential as the workplace faces unprecedented change in both its structure and the roles that are carried out within it.
Nesta’s innovative programmes further the science of skills and future of work and directly complement ProFinda’s mission of enabling organisations and their workers to extract more value and reward from their skills.
“Nesta Impact Investments has a strong track record of supporting businesses using cutting edge technology to develop novel approaches to emerging societal challenges. ProFinda is exploring two of our key areas of research – the future of work and collective intelligence.We want to continue to support organisations like ProFinda that are developing innovations that will uncover the hidden skills and capabilities across society and enable new ways of working.
“ProFinda is a platform that will help transform the workplace, empowering people to demonstrate, use and develop their skills more effectively and facilitating the development of new forms of collaborative working that break down the limitations of traditional enterprise structures.”
Roger Gorman, ProFinda’s CEO, said:
“We are already working globally with some of the most knowledge intensive firms, helping them adapt to the future of work through a skills lens. Nesta’s investment is key to enabling us to use these corporate deployments to light the way for organisations everywhere to see that there is a better way to match a person to a piece of work for the benefit of everyone.
“People work better when their work makes the most of their skills and interests and builds in purpose. The challenge is that it’s all too easy for skills and interest to be wasted. Talent is hidden behind job titles or departmental walls. Talented people feel trapped or lost.
“We can deliver impact through ProFinda by transforming how the right people are matched to the right work, enabling people to find meaningful projects and experiences, and helping businesses to harness the potential of their employee and contingent workforces. This leads to greater satisfaction at work and smarter personal development which unlocks huge social good. Alongside, we can contribute to those organisations who are solving the world’s most pressing problems by helping clever groups like Code First: Girls and onPurpose to deploy their talent better. Our partnership with Nesta and their investment in our platform enables us to grow and significantly extend ProFinda’s impact.”
Since 2011, the impact of ProFinda’s technology has been demonstrated in some of the most demanding client environments. It is used in a wide range of contexts including workforce resource management by global professional services partnerships, client network support by leading private banking organisations and network mobilisation by international disaster management bodies.
Formerly NESTA, National Endowment for Science, Technology and the Arts, NESTA was established in 1998 with an endowment from the UK National Lottery and became an independent charity in 2012.
FutureGov sale
We are happy to announce that we completed the sale of our investment in Futuregov to The Panoply last month.
FutureGov was one of our impact fund’s initial investments and we invested three tranches of capital spread between January and November 2014, as lead investor alongside Surrey County Council.
The company has been changing public sector organisations through digital transformation for over a decade, using design, technology and organisation development approaches to create public services fit for the 21st century. Their client base ranges from Homes England and Essex County Council to NHS Digital. During our investment horizon, we helped the company’s organic growth and strategic mission alignment, building out a senior management team, and expanding the service offering through acquisition. This resulted in the company becoming a thought leader and a rare asset with few specialist competitors of scale.
With an 8 figure enterprise valuation led by a strong team and a fast growing EBITDA margin, this transaction is likely to be a strong venture capital benchmark for GovTech businesses, especially social enterprises, for some time to come. It also underlines the results that management teams with grit and resilience, coupled with patient capital from Nesta and others, can achieve.
Our heartiest congratulations and best wishes to CEO Dominic Campbell, Chairman Peter Martin, and the entire team in scaling the next stage of growth in their new roles at Panoply.
