SET Report 2019 – 2021: Snapshot of the Start-up Energy Ecosystem
June 30, 2021
The “SET Report 2019-2021: Snapshot of the start-up energy ecosystem”, written in cooperation with our partner Early Metrics, has been released on June 29, 2021 at our online launch event. The report is born out of the realisation that the global energy sector is facing many emerging opportunities and challenges. The challenges faced can act as a serious brake to the development of innovative technologies, thus slowing down the energy transition.
Do energy and mobility start-ups get enough funding? What’s affecting their growth? How does it affect the implementation of innovative solutions?
The Start Up Energy Transition report 2021 aims to provide readers with the latest information and give a better understanding of the energy sector, its future and its start-ups. The report compares energy and mobility start-ups to over 3,500 start-ups from various sectors, and analyzes the progression of the SET100 start-ups.
How do energy and mobility start-ups compare to other sectors?
They have more innovative products/services
The report shows that energy and mobility start-ups tend to create products with a higher level of innovation than other sectors. The product development can therefore be more intensive in terms of R&D. The length and complexity of the R&D can often require large upfront investments, which puts the start-up at risk if it doesn’t find new funding on a regular basis.
Moreover, hardware start-ups need several years to develop a market-ready and scalable product. They must overcome many technical, commercial and regulatory hurdles before becoming sustainable. The overall project score in the growth potential rating is therefore affected by these factors.
They secure larger amounts of funding
The data highlights that energy and mobility start-ups have significant difficulties in reaching their funding goals. This doesn’t mean that they raise lower sums than others, on the contrary, but that they only raise a third of the amount they were looking for on average.
Energy and mobility innovation is generally more capital intensive at early stages than other sectors. Some areas of these sectors, such as shared mobility systems, are also more competitive, making it potentially harder to secure the expected funding. Other common hurdles to securing funding include an insufficiently innovative project, failure to demonstrate the validity of the business model, or the inability of entrepreneurs to defend their projects convincingly in front of investors.
They face more growth difficulties
Energy and mobility start-ups experienced slower growth than the average, both in terms of revenue (125% versus 148% average revenue increase) and team size (58% versus 75% average team growth). The longer development cycles, postponing the sales phase, could explain the difference.
In turn, this aspect may limit revenue growth as well as the amount of money that energy and mobility start-ups can invest in recruitment, making it harder to recruit talents needed to grow.
The top 5 success factors for energy and mobility start-ups
According to the report, the following key attributes influence largely the survival and success of energy and mobility start-ups:
– Commercial traction;
– Technical development reached;
– Complementarity of skills;
– Competitive advantages secured;
– Ability to finance.
SET100 start-ups 2019-2021: their evolution
In the following section, Early Metrics have aggregated all the data collected from the applications of 1,175 start-ups for the 2019, 2020 and 2021 editions of the SET Award. In parallel to what they conducted qualitative interviews with winners of the SET Award. Here are some of their key findings which are overall very positive:
– 98% survival rate among SET100 start-ups
– 90% expanded to a new country or region
– 25% raised after participating at SET Award
– €4.2M average funding raised
Portrait of an Alumni: eleXsys
By fortifying and stabilising the grid, eleXsys (by Planet Ark) allows significantly more energy from small, distributed renewable sources to flow into the grid in a safe and reliable manner. The Australian start-up won the award in the ‘Smart Grids’ category in 2019.
– Expanded into four new countries
– Raised $10m, well above their target
– Plans to list on the LSE in 20
Conclusion of “SET Report 2019-2021: Snapshot of the start-up energy ecosystem”
To conclude, the report made it clear that energy and mobility start-ups have higher R&D costs and the return on investment (ROI) takes longer than in other sectors. This could lead to more difficulties to secure enough funding to develop their innovation, recruit talents and scale-up.
Given the growth difficulties observed in this ecosystem, the progress made by the SET100 is all the more impressive. Most of the top 100 participants to the 2019 and 2020 SET Award experienced strong growth after the award.
SET is proud to support a growing number of innovators in the energy space from across the globe. By continuing to provide visibility and connections to top start-ups, we hope to accelerate the global energy transition and create more opportunities for sustainable innovation. Beyond the award, SET will continue to grow as a global innovation platform, to build bridges between public and private stakeholders operating for the betterment of the energy sector and related industries.