Halo investment for impact businesses – reframing and securing investment

As intellectual property attorneys, we have noticed two trends, one longer standing, one more recent. The longer-standing: securing investment for companies with a hardware focus is extremely tough. The more recent: in 2025, climate tech and sustainability-oriented companies, a large part of the “impact” sector, were no longer in favour. Instead, software companies, and in particular AI, are in vogue.

Nonetheless, critical infrastructure is in desperate need of modernisation in many countries, and individuals, families, and businesses do not want to pay more for their heating, cooling, basic utilities and food. Fundamentally, all of this requires hardware in one form or another. As it happens, so does AI, since this is enabled by chips and data centres.

This shows there is a disconnect between what investors are prepared to back and the practical needs to deliver for businesses and consumers. However, there are signs of a growing recognition of this: Wall Street is strongly backing “Halo” companies in Q1 of 2026, and markets in the UK and EU are hitting record highs backing such companies.

Short for “heavy asset, low obsolescence”, Halo companies are those with often sizeable physical hardware that are hard to replace with software. For example, think of a power generation turbine in a traditional gas power station or wind turbine: technically complex, large hardware that is difficult or impossible to replace with a software-only solution.  While software and AI can be used by a Halo company to gain efficiency, it can never be a one-for-one replacement.

The purpose-led pitches of impact businesses are not working as they used to. This has led these companies to search for ways to reframe their investment pitch. This may be a waste-handling start-up going through early-stage investment rounds, a metal-producing multinational assessing the technology to invest in for its next industrial-scale furnace, or a ship owner considering its next ship purchase with an eye on the International Maritime Organisation’s aspirations for 2050.

Halo company hardware is typically capital-intensive and takes a long time to develop. This is where impact businesses can show alignment with something which markets are recognising: the value of long-term security. Whether it is bolt-on, retrofit, augmentation technology or brand-new hardware installations, impact companies in this space all have something in common: greater efficiency and lower expenditure on fossil fuels. These have the power to cut overall expenditure in the long term and often in the short term.

It is precisely the capital-intensive, long development times that have been a disincentive to investors in the past. However, the pace of AI developments means that significant advances are being made all the time. This causes rapid shifts in which companies are leading the pack, potentially making investment decisions less easy than in the past. This means the care and attention applied by Halo companies to produce a long-lasting, high-margin product carries an obvious attraction to investors.

As in the pharmaceutical industry, where the first tablet costs billions to produce with the second costing pennies, the capital required for the first Halo product vastly outweighs the cost of producing the second. As well as protecting that significant effort in producing the first product and controlling the ability to produce subsequent products, intellectual property (IP) comes into play from the need to run pilots, partner with others, and operate unattended on remote sites or where a service engineer for a competitor can easily wander past. 

This requires an IP strategy tailored to a company’s specific circumstances; when to pursue patents and when not to, where branding will be used, and what specialised knowledge, trade secrets and know-how are developed. IP not only protects products from independent third parties. It also bolsters a company’s core value when working with partners, fabricators, labs and several other “almost” competitors.

With investors conscious of the capital expenditure and development times for Halo products, they will want some security for their investment. That security is the IP.

If you would like to discuss how IP could be used more effectively within your business, how to frame this for investors, or simply wish to discuss an innovation, please email us: gje@gje.com.