Cleantech innovation ecosystems produce and scale innovation, driving economic growth and creating rewarding, future-proof jobs in the process. Ecosystems work best when all stakeholders are pulling in the same direction to create value for themselves and for the ecosystem as a whole, with connectivity as a key driver. As well as innovator growth and investment attracted, leading cleantech ecosystems are measuring success in terms of overall economic value, environmental impact, and tangible results from ecosystem connections.
Effective Ecosystems Create Network Effects
The magic of ecosystems is in the network effects they create: in a cleantech innovation ecosystem corporates, start-ups, investors, research organizations, government, civil society, and other actors interact in different ways. Commercial partnerships, mentoring and knowledge sharing, and feedback to policymaking are just some of the ways this happens. The result is faster-growing SMEs, more innovation brought to market, and more effective collaboration.
Effective Cleantech Ecosystems Create the Conditions for Cleantech Innovators to Flourish
Ecosystem builders know that this is difficult to measure. Activities like networking events clearly benefit the whole ecosystem, but how do you attribute results to them? The same network effects which enable the outsized impact mean that cause and effect is not linear.
At the same time, sponsors of ecosystem services and initiatives want to know that their money is being spent wisely. Next year’s plan needs to do more of the activities that led to results and cut the ones that used energy and resources and didn’t give back.
It’s All About the Start-ups – Or Is It?
Start-up ecosystems are focused on start-up creation and scaling. Historically, ecosystems – especially tech ecosystems – have measured success in terms of number of start-ups, amount of VC funding, or creation of unicorns. These are often the most easily available metrics, and they do give an indication of entrepreneurial activity. But there are a few reasons that leading cleantech ecosystems are defining success in other ways:
- Cleantech companies may not need, or be eligible for, the venture track. They may seek alternative forms of funding to scale, or they may remain SMEs, while still creating local economic impact
_ - The majority of innovative cleantech solutions are B2B, and many of them involve industrial processes. So, corporates are important stakeholders, and important solutions will be brought to market by larger companies as well as start-ups and scale-ups
_ - Venture capital is not the primary source of risk capital in many low- and middle-income countries. Growing companies are more likely to be bootstrapped or funded by family and friends
From Innovation to Economic Growth
As cleantech becomes a priority sector for innovation ecosystems around the world, ecosystem builders are looking at more nuanced ways of defining and measuring success. Our work with UNIDO’s Global Cleantech Innovation Programme (GCIP) identified a set of metrics which are being used by leading cleantech hubs globally to measure success. These include economic indicators, measures of environmental impact, and entrepreneurial indicators which look beyond the number of start-ups and funding to unpack deeper indicators of ecosystem maturity.
Economic Indicators
- Speed of growth for start-ups in the ecosystem compared to the market average
_ - Gross value added (GVA) growth for the ecosystem compared to other ecosystems
_ - Number of jobs created by cleantech companies in the ecosystem
_ - Foreign direct investment (FDI) attracted by the ecosystem
_ - Number of educated/skilled workers attracted to the region
The West Midlands Combined Authority in the UK supports several cleantech-themed clusters, including cleantech, advanced manufacturing, and automotive. Over the last few years, the WMCA has put in place measures to track the GVA of the local Low Carbon Environmental Goods and Services (LCEGS) economy, which can be a proxy for value created by the local cleantech ecosystem. GVA for the West Midlands area was £9.2B in 2023/2024 with an expected CAGR of around 9% per year over the next 5 years.
In Australia, the City of Melbourne has an earlier stage cleantech ecosystem but is working on ambitious plans to grow the sector, including attracting local manufacturing facilities for cleantech solutions. The City of Melbourne has set a target of 27% green jobs, using cities in the Nordic region as a benchmark.
Environmental Indicators
- Greenhouse gas emissions reduced by companies in the ecosystem
_ - Waste volume managed (prevented, reduced, recycled) by companies in the ecosystem
Environmental impact is difficult to track at the ecosystem level, although several frameworks tackle tracking at the portfolio level. While PCAF provides a GHG reporting standard for the financial industry, estimating impact of early-stage companies, or indicators such as water or waste, is more complicated. Likewise, most efforts to date calculate impact at the company level and ladder up to extrapolate for the ecosystem.
Entrepreneurial Indicators
- Investment in start-ups and scale-ups
_ - Participation of serial entrepreneurs in the ecosystem
_ - Emergence of new VC funds in the ecosystem
Beyond start-up creation and total VC funding attracted by the ecosystem, additional factors can indicate that an ecosystem is growing and maturing. Serial entrepreneurs are those who have previously scaled and exited from a venture. Although they are a clear indicator of ecosystem maturity, there is surprisingly little information available on the concentration of serial entrepreneurs, even in leading cleantech ecosystems globally. Notable examples include Stockholm-headquartered innovator Northvolt (which has now filed for bankruptcy) whose founding team included an ex-Klarna founder.
The number of active climate investors in an ecosystem is an indication that investors see promise. Whereas investment into start-ups is a backwards looking metric, the emergence of new funds indicates future potential. Cleantech for Europe has tracked cleantech fund closes since 2021. The EU share of global cleantech funding has increased from 13% in 2020 to 22% in 2024.
Connectivity is a Key Driver of Network Effects
Ecosystem builders recognize that connectivity within an ecosystem is a key driver of the network effects which lead to systemic impact. However, it is not easy to measure, or attribute.
“It’s very hard to attribute results with activities aimed at increasing connectivity. For example, we might hold an event in which two organisations get talking and later turns into a partnership. But if those two organisations already knew each other, where does the credit go? How can we measure the impact?”
Sylvie Russell, COO, Cambridge Cleantech
The approach so far has focused on identifying tangible results from connections facilitated by the ecosystem:
- Collaboration between corporates and start-ups
_ - Cooperation between universities and corporates
_ - Collaboration between business and government
_ - Number of regulatory or policy proposals
_ - Media impact: number of press articles on topics critical for innovation growth in the relevant sector
Watch This Space
While still a way off, emerging AI tools for enhanced data collection, impact assessment, and data modelling mean that tracking connections and ecosystem-level impact with more certainty may soon be within reach.
