I had a meeting last week with an energy startup. They are raising €30 million to build their first pilot plant.
It’s not the first time I met a startup trapped at this very junction: a very promising technology at TRL4-6 needing tens of millions to make the next step. Moving up along the TRL scale in capital-intensive industries is extremely challenging. In the energy industry, for instance, testing building a first pilot installation for an innovative windmill, geothermal or nuclear technology may be worth tens of millions of euros. So, how can innovators advance their TRL?
- Define and build your PoC.
The first thing to do is establish a valid PoC (Proof-of-Concept). Typically, in the energy field, computer simulations can be used as PoCs, are generally accepted as a TRL3 or 4 and are relatively affordable. At this stage, working together with RTOs can be very useful not only because they can provide technical expertise but also because, in some cases, they can also facilitate R&D grants.
2. Identify your core technology and develop a prototype.
From a PoC you will need to define your roadmap towards a first prototype. Decompose the system in several subsystems so that you can claim TRL9 for all those that are already provided by commercial players and you can focus your tech development roadmap on those components that are not yet commercial.
It may be the case that you can also design experiments for those innovative components that do not necessarily need tens of millions of euros of investment. Some of the components could probably be prototyped at lab scale. Also, if you are able to isolate your core innovation, you might also be able to find funding schemes suitable for those developments, that is, in the order of hundreds of thousands of euros. The real aim is to claim that a valid prototype (TRL5-6) is achieved.
3. Get funding and build your demonstration site.
From that moment, in Europe you can apply to instruments such as the EIC Accelerator for TRL6-8 development to build a small-scale pilot. Thanks to the EIC contribution of €2.5 million in grant funding you should be able to continue climbing up the TRL scale up to 7 or 8. At that time, there are good chances that you can attract investor funding to complement the EIC equity investment (up to €10 million for a maximum 50% stake in the round).
For some developments, even an EIC-like funding round of €20-30 million could not be enough to build a real pilot at TRL8. At Strata we have been involved in such energy projects but also in other areas such as quantum, biotech and automotive. At this stage investors would be already willing to invest in the order of several million euro in your technology. But if you really need a lot of additional grant funding for your FOAK (First of A Kind) plant, then you should look at national and European funding schemes for strategic projects as well as the EU Innovation Fund.
Conclusion: focus on your core tech!
If you are at POC level and your next step is to raise tens of millions you would probably be stuck with no options. Private investors will shy away and big grants may be very difficult to attain. You need to find closer milestones which are not so capital demanding. Try to focus on your core technology development, advance your TRL and externalize all other components. This way investors as well as public funders will be more willing to invest in your startup.
Hope this helps!
This article was first published on LinkedIn by David Arias on March 24, 2025
Image by Ed White from Pixabay
#energytransition #foak #innovationfund #eicfund #technology #scaleups #innovation
