Startups Blog

6 Biggest Challenges for Energy Startups

Getting a startup off the ground is never easy, and this is a fact. For a significant number of people who have initiated an energy startup, the idea never went beyond their laptops.

Off-grid-power

Beyond birthing the idea and creating a blueprint, the actual physical work to be put in is a major determinant of whether or not a startup gets anywhere. 

The rapid move from concept to prototype to the market typically requires most startups to seek serious monetary power in order to fund equipment, buy-in ability, and premises. 

Typically, the most difficult aspect is trying to create a bridge between the idea and the prototype. Taking a cue from this, here are 6 of the biggest challenges that energy startups face:  

1. Finance 

Just like any other startup, energy startups require a handsome amount as well, perhaps even more than the average startup. This is because the energy niche usually requires the use of sophisticated equipment and expert knowledge that doesn’t come cheap. 

And since the average innovator is unable to fund his ideas, searching for investors becomes the next line of action. 

Financial backups from investors whether, from Angel investors or venture capital firms, are the backbone of any energy startup in monetary terms, and the amount released is subject to the investors’ discretion. Angel investors typically fund seed rounds, while venture capital companies fund Series A, Series B, C and beyond rounds. This leaves most startups at the mercy of investors. 

Most startups are usually hard strapped for cash in the early days of their existence and this is about the main problem they have to overcome first. 

2. Relevance 

A whole lot of times, startups struggle for relevance and this isn’t any different in the energy industry. Increased advocacy for clean energy implies that having an innovation that serves to pollute the environment isn’t going to be welcomed at all. 

Similarly, the more the benefits that an energy startup offers, the better its chances of wading the stormy waters of competition successfully. 

Also, the relevance, importance or impact of your innovation in the energy sphere would be called into question as well. Questions like “what problem is your innovation solving?” would definitely be asked.

 A startup that isn’t considered relevant would most likely not survive. And in order to gain relevance, your innovation should tackle an aspect that is very essential in the energy industry. 

3. Competition

Statistics show that 137,000 businesses are launched every day in the world. This implies that the corporate world is a very fierce one. 

One can only imagine the amount of competition that a startup would face. And when it comes to startups, the competition is perhaps even fiercer. It is, therefore, one of the major challenges that an energy startup would face. 

The amount of competition out there doesn’t allow for the tiniest margin of error. Apart from presenting a practical idea, aggressive planning and deliberate, targeted actions are essential to staying in the game. 

In order to stand out and gain recognition amidst a swarm of other startups, execution has to be top-notch. 

4. Building a Team 

In order to survive in today’s business sphere, being a one-man army doesn’t help anyone. Instead, any startup needs a core team that would pool ideas together and put in some muscle as well.

 The team’s synergy is about one of the most essential factors that would go on to define the organizational culture even in an energy startup. However, building a team involves hiring capable individuals and this is where it gets quite tricky. 

There is usually a very large crowd of people who would apply for various posts, however, selecting the perfect people for these posts is pretty tasking. 

And you should recall that selecting the right people for various roles is vital to the survival/ success of the startup.

5. Building Up a Customer Base 

Whether your innovation is aimed at the energy aspect of corporate organizations or households, you would still need to build a customer base. The fact remains that this is one of the most difficult aspects to work on as a startup. 

First off, you need to get your potential customers to trust your innovation. Next, you would need to build up a loyal customer base. Depending on whether you are providing a service or selling a product, the concept is similar. 

They need to be convinced that what you’re offering is important for them and they should not pass up on it. 

For instance, any conservation-oriented organization can see that the concept of cogeneration is a very practical solution for converting waste energy into useful energy. 

Startups typically face the challenge of building up a customer base that recognizes the importance of their work. 

6. Rapidly Evolving Times 

The world is a constantly evolving one that renders various of even the best startup companies obsolete in no time. In the energy sphere, people are constantly at work to discover new and better ways to generate clean and sustainable energy. 

It is therefore very important to suddenly find your idea obsolete in a twinkle of an eye. In order to avoid this, focusing on the global market is essential. 

There are various problems that are yet unsolved while some systems are not perfect just yet. These are aspects that any energy startup should focus on. Flexibility is essential as well.

There are always new aspects to apply any product or service to and this is no different in the energy niche. 


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