Energy-tech is probably one of the most exciting investment opportunities of our time, but at the same time, one of the toughest arenas for founders. Why is that?
Few other sectors bring together so many global megatrends: the decarbonization of economies and societies, the growing importance of energy security and resilience, the digitalisation of infrastructures, and the immense capital intensity required for the transformation. At first glance, the opportunity looks unique: battery technologies, smart grids, virtual power plants, new forms of energy efficiency, or digital solutions for grid integration are not just future markets but absolute necessities if Europe wants to achieve its climate goals and maintain geopolitical agency.
Energy-tech startups face markets characterised by long sales cycles, complex regulation, and dominant incumbent players. Unlike classic software or fintech markets, it is not enough to launch a good product quickly and then scale through network effects. Here, something else decides success: whether investors provide not just capital but also the international networks needed to secure market access, regulatory orientation, and strategic partnerships.
One thing is clear: capital is a necessary precondition, but never sufficient. Without investors who can open doors to international markets, regulators, industry players, and talent pools, even the best technology risks are getting stuck in pilot mode.
Capital alone is not enough
Many founders underestimate how fragmented energy markets really are. While software startups can often think globally and scale their products internationally with minimal adaptation, energy markets are defined by national regulation, subsidy logics, and entrenched market structures. A business model that works in Germany may face entirely different conditions in Spain or the U.S.
Take Germany, where the Renewable Energy Act (EEG) shaped decades of specific subsidies for wind and solar or Spain, by contrast, experienced aggressive subsidy programs in the 2000s, followed by a radical stop that drove many young companies into bankruptcy. Today, the market is booming again, but under completely different regulatory and financial mechanisms. For startups without local networks, this can mean losing valuable years.
This is where the difference between an investor focused purely on capital and one with an international network becomes clear. Internationally connected investors can open doors that go far beyond funding: they provide market access through their connections to grid operators, utilities, industrial players, and municipalities; they bring regulatory guidance by offering insights and access to policymakers, enabling startups to understand and leverage legal frameworks early; they foster industry partnerships with technology providers, system integrators, or infrastructure funds that make scaling possible; and they give access to talent pools, helping founders build international teams with experienced executives and specialists.
Without these bridges, many energy-tech startups remain stuck in local markets that are too small to unlock their full potential.
Why LPs are turning toward Energy-Tech
Another driver of the relevance of international networks comes from the investor side itself: Limited Partners (LPs) have, in recent years, begun to recognise energy-tech as a standalone asset class. Just a few years ago, it was common for funds to market themselves with generic sustainability labels. Terms like “green,” “impact,” or “sustainable” dominated pitch decks, often without hard numbers to back them up. That has changed. Today, LPs ranging from sovereign wealth funds to pension funds demand clear, measurable evidence.
Energy-tech delivers exactly that. Every kilowatt-hour saved, every ton of CO₂ avoided, every increase in energy security is quantifiable. Startups in this sector can show their “carbon ROI” as precisely as their financial KPIs. For LPs, this means less greenwashing and more substance.
Energy security as an economic opportunity
A second major driver is geopolitics. The 2022 energy crisis made Europe painfully aware of its dependence on external suppliers. The EU’s share of Russian gas imports fell from 40% to around 10%, but dependence on the U.S. and Norway remains high.
For LPs, this creates a new reality: investments in energy-tech are not just about sustainability but about national resilience. Energy security has become an economic competitiveness factor. Technologies that create independence are not only environmentally beneficial but economically essential.
Yet energy security is, by definition, international. It affects supply chains, raw materials, infrastructure, and markets that are interconnected across borders. That is why LPs today scrutinise whether funds can truly build these international bridges.
Fundraising 2025: What founders need to ask
For energy-tech startups, the current fundraising environment is both promising and challenging. On the one hand, enormous amounts of capital are flowing into low-carbon technologies: according to the IEA, investments are expected to reach a record €3.1 trillion in 2025. On the other hand, selection criteria are getting tougher. LPs and funds are more critical, business plans face deeper scrutiny, and capital without networks is losing its appeal.
Startups, therefore, need to ask the question: Does my investor bring more than money? What really matters is whether they can act as a global bridge, supporting entry into markets with complex regulation and opening doors to utilities or regulators in the target regions. Just as important is their scaling experience; can they point to concrete cases where technologies have successfully grown beyond pilot projects?
Founders should also look closely at the nature of the capital: is it truly patient, or tied to quick-return expectations that are often incompatible with energy-tech? Finally, the structure of the cap table plays a critical role. If it includes not only financial investors but also industrial and infrastructure partners, the chances of moving from pilot to large-scale deployment increase dramatically.
Especially in 2025, as the volume of investment in energy-tech grows while competition intensifies, these questions separate the wheat from the chaff. Founders who look only at ticket size risk lacking the levers they need when true scaling begins.
Challenges and differentiation in a crowded market
Energy-tech is no longer a niche. According to the IEA, there are currently around 72,000 startups active globally in energy-related fields. Add to that hundreds of funds competing for LP capital and the best founders. In such an environment, differentiation becomes decisive.
But how do you turn pilot projects into a true scale? A startup developing a new storage technology might win pilot projects with municipal utilities in Germany. But the real opportunity lies in southern Europe, where solar-driven grid fluctuations are especially high. Spain, for example, has invested massively in solar power and now often produces more electricity on sunny days than the grid can absorb. This creates huge opportunities for storage solutions, but only for startups that find the right local partners early.
Another example is data centres. Scandinavia continues to see a boom in sustainable facilities, thanks to low cooling costs from colder climates and abundant renewable energy. Startups offering efficiency or flexibility technologies here need access to highly specialised networks of operators, utilities, and regulators. Without that network, they lose ground.
Looking ahead: internationalisation as a survival strategy
The next five years will reshape the energy sector. Europe is leaning on regulation and subsidies, the U.S. is driving private investment through the Inflation Reduction Act, and within Europe, countries like Germany, Spain, and the Nordic states are following very different market logics.
For startups, internationalisation means survival. Focusing on a single market risks being derailed by regulatory changes or saturation. Only with international networks built early can founders adapt flexibly and seize new growth opportunities.
This diversity is not symbolic, but essential to help startups enter new markets, identify regulatory hurdles early, and connect with the right industrial partners. Only then can technologies break out of pilot mode and scale widely.
Read the orginal article: https://www.eu-startups.com/2025/10/why-capital-alone-wont-scale-energytech-internationally/
