Earlier this month, Cleantech for UK welcomed its newest member, AP Ventures — a specialist venture capital firm focused on investing in breakthrough technologies across the hydrogen and carbon value chains. Known for backing early-stage companies that are tackling some of the hardest-to-abate sectors, AP Ventures brings deep technical expertise and a global outlook to the cleantech ecosystem. James Diaz-Sokoloff, Senior Investment Manager at AP Ventures, sat down with Charlie Garner, Policy Associate at Cleantech for UK, to discuss the firm’s investment thesis, the innovations they’re most excited about, and the crucial role policy must play in enabling scalable climate solutions.
My first real exposure came during a year in industry, before university, through the Royal Academy of Engineering’s Development Programme. After graduating, I joined BP, where I spent five years — but towards the end, I felt a strong pull to be on the right side of history. That motivation was emotional as much as it was analytical: cleantech and renewables are mega-trends, yes — but they’re also essential if we want to stay within planetary boundaries.
I never set out to work in venture capital, but over time it became clear that investing in, and supporting, pioneering founders could be a powerful way to make a difference. What keeps me going is the huge satisfaction I get from helping companies scale. It’s been incredible to support one of our portfolio companies from their spin-out phase to now, where they’re knocking on unicorn status. It’s also been eye-opening to discover just how many important technologies exist beyond power and low-carbon fuels — there’s so much more potential out there.
Our investment mandate is both focused and expansive: we specialise in the hydrogen and carbon value chains. On one hand, that’s a narrow field. On the other, it covers everything from hydrogen production to carbon capture, storage, transport, and end-use applications.
We invest at seed to Series A stage. We look for companies where the technology shows clear intent and momentum — transitioning from lab to commercial deployment. That usually means robust pilot plans, compelling data, and a team with strong chemistry and shared values.
Importantly, the technology must have a realistic pathway to being commercially competitive. Increasingly, that means not relying on incentives in the long term. In many areas where innovation is accelerating, success comes from being fundamentally best-in-class and disruptive — not from riding subsidy waves.
One of the biggest challenges is what I’d call optimism bias. Founders often believe their solution is the answer and that everything will go smoothly. But especially in hardware-based tech, it always takes longer than expected. That’s why contingency planning is crucial — you have to prepare for the unknowns in scaling.
We have excellent research institutions in the UK, and while more capital is always welcome, some of the real gaps are around narrative and planning. Founders need to be able to tell their story well — which can be tough for those from engineering or academic backgrounds. Storytelling matters more than we often realise.
We’re particularly excited about carbon utilisation — technologies that convert CO₂ into valuable products. One example we’re looking at is a CO₂-to-fabric innovation, which could transform the environmental footprint of the fashion industry. Considering the sector’s significant global emissions, that could be hugely impactful.
Within our current portfolio, we’re seeing hydrogen production technologies gaining momentum, including conversion into alternatives like sustainable aviation fuel. These companies are now hitting scale, and the second wave of innovation they’re enabling is especially exciting.
I’d urge them to prioritise pragmatism over perfection — particularly around carbon classification. There's been too much debate about the source of CO₂ — whether it's anthropogenic, biogenic, or from direct air capture — and concerns about locking in fossil-based emissions.
My view is: let’s first build a circular carbon economy that values CO₂ and what it can be converted into. Then, 10–15 years from now, we can tighten regulations around where that CO₂ comes from. Getting caught up in overly rigid classifications, like what we’ve seen in both the EU and US under the Inflation Reduction Act, can stall momentum.
A slightly more flexible approach would help the industry move faster — and we can refine the rules once a market exists to refine.
We’re already seeing companies consider setting up operations in the US to take advantage of incentives there. But the broader trend is towards maintaining optionality — developing projects in jurisdictions that align with UK values and climate goals.
That said, the current global climate — including trade tensions — is likely to slow down large-scale projects. CapEx is going up, especially with rising costs for materials like steel. If you’re using debt to finance a project, those costs are rising too, which can make certain projects less attractive.
However, on the early-stage side, I expect continued activity and investment. There’s still strong appetite for backing bold new ideas. It’s a very different picture if you’re trying to raise project finance versus spinning out a promising PhD idea.
Overall, I think we’re heading for a challenging but necessary transition. The energy shift is happening — whether it’s orderly or disorderly remains to be seen — but innovation thrives under pressure. The hype around hydrogen has cooled, but that’s led to more focused, grounded conversations about where it really makes sense. That’s a good thing.
As a global investor focused on decarbonising hard-to-abate sectors, we know how vital collaboration is — across investors, policymakers, and industry. Our work in early-stage hydrogen, CCU and CCUS has shown that alignment across the ecosystem is key to turning a good idea into a commercially scalable, emissions-cutting success story.
We joined Cleantech for UK because we want to help accelerate innovation here — and ultimately, export that innovation for the UK’s benefit.
Investors like us can play an important role in shaping policy, because we bring a real-world filter to ideas. If something doesn’t make sense from an investment perspective, we’ll say so. Policy needs to be stress-tested with private capital — especially early-stage capital — to ensure it actually works on the ground. We bring that critical lens and that practicality, and I think that’s where we can really add value
Thanks James - it's been a pleasure.
As this conversation makes clear, if the UK wants to remain competitive in cleantech, we must listen to and work with investors who are putting capital at risk today. That means smarter policy, stronger storytelling, and serious ambition — across the board.
