Münster. Batteries are considered a key technology for climate-neutral mobility - and high-performance battery cell production in Germany and Europe is seen as strategically important. One estimate illustrates the scale of the need: According to this estimate, the European Union will need up to 18 times the amount of lithium used in 2020 by 2030 and up to 60 times that amount by 2050 to meet the expected demand for batteries. However, for innovations to reach industrial application more quickly, we need not only new technologies but also young companies that can scale them across the value chain. Until now, academic research has only provided a patchy picture of where new companies are emerging in this race - and where they are not. This is precisely where the new study comes in.

Startups Are Concentrated in the Midstream

The study reveals a clear pattern: a striking amount of startup activity is concentrated in the middle stages of the battery value chain that is, in advanced materials and specialized components, as well as subsequent cell manufacturing. While the technological requirements are high in these areas, startup and innovation pathways are generally more financially viable compared to other stages. This makes these areas attractive to investors and industry partners and leads to intense competition. “Startups emerge primarily where the required expertise is high but the capital needs are still manageable. At the same time, we see that large funding rounds are concentrated among a few companies, while many startups remain underfunded. This is precisely what creates a scaling gap,” explains Linda Brüss, a research associate at the Institute for Entrepreneurship at the University of Münster.

Start-ups Avoid Key Bottleneck Areas

Significantly fewer companies are emerging in particularly capital-intensive and regulatory-intensive sectors. This applies to segments at the beginning of the value chain as well as activities at the end of the chain, such as recycling and second-life applications. “The results make it clear that startup activity and industrial policy needs do not automatically go hand in hand. While some technology fields benefit greatly from innovation, critical areas such as recycling and industrial scaling still lack sufficient start-ups. If Europe wants to strengthen its battery value chain, start-ups must be supported in a more targeted manner in areas where bottlenecks still exist today,” says Dr. Florian Degen, head of the Production Technology at Fraunhofer FFB.

North America, Europe, and Asia Are Taking Different Paths

The 144 startups are unevenly distributed across regions and operate under different industrial conditions. North America exhibits activities closely tied to raw materials and a strong focus on future battery technologies such as solid-state and lithium-sulfur batteries. Europe is strong in battery recycling and the circular economy, but is less well-positioned in upstream value-added steps and individual components. According to the findings, Asia relies on dense clusters of materials, components, and cells. Established corporations there shape production networks, supplier structures, and training pathways, thereby creating important prerequisites for the scaling up of young hardware companies.

Investments are rising significantly; the scaling gap remains

Investment in battery startups increased sharply after 2019 and peaked in 2021/2022. The broader energy transition market reached a record high of 2.1 trillion U.S. dollars in 2024. However, the picture is mixed: A few capital-intensive companies secure large rounds of funding, while many hardware- and material-intensive startups remain underfunded. This reveals a scaling gap precisely where additional capacity would be particularly relevant for security of supply and the circular economy.

Funding programs alone are not enough

Another key finding of the study is the tension between the density of policy measures and actual startup activity. Although Europe has a high density of battery policy support measures, comparatively few startups are emerging, particularly in the capital-intensive segments of the battery value chain. The results suggest that funding programs alone do not automatically steer startup activity toward areas of particular strategic importance. “Europe needs startup support that not only backs early-stage ideas but also considers the path to industrial scaling. In the battery sector in particular, especially high hurdles arise where capital requirements, regulation, and skilled labor converge. Funding must therefore be reliable, tailored to each stage, and designed for the long term,” recommends Prof. David Bendig, Director of the Institute for Entrepreneurship at the University of Münster.

Implications for Policy and Industry

Clear implications can be drawn from the results: According to the researchers, startup funding in the battery sector should focus more closely on the hurdles specific to each stage of the value chain. Broad-based support for the already well-served middle segment falls short where young companies must cope with particularly high capital requirements, lengthy qualification processes, and uncertain market access. Therefore, reliable framework conditions, long-term demand signals, stage-appropriate and risk-tolerant financing, as well as streamlined approval and certification procedures are crucial. Shared qualification infrastructure and pre-competitive data spaces provided by industry consortia can also help facilitate the transition from technology development to industrial scaling- provided that policymakers, industry, and financial institutions all pull in the same direction

Scientific Methodology

The study combines the theory of global value chains with entrepreneurial ecosystem theory and employs a stage-based mapping approach. Based on Crunchbase data, the team manually reviewed over 400 identified companies and assigned a final sample of 144 startups (founded 2014–2024) to the stages of the value chain and the regions; hybrid business models could be assigned to multiple stages. The policy context was provided by the International Energy Agency’s (IEA) Policies and Measures database. The mapping is limited to core production and end-of-life recycling; downstream product manufacturers and digital cross-sector providers (e.g., analytics, software, IoT) are excluded.

Original publication

Bendig, D., Brüss, L., Degen, F., & Schäper, T. (2026): Mapping the global battery start-up landscape across the value chain: Implications for market design and industrial policy. Energy Strategy Reviews 65, 102202. Open Access (CC BY). DOI: 10.1016/j.esr.2026.102202

Funded by the Federal Ministry of Research, Technology, and Space (Grant Number 03XP0590C). Open Access publication made possible by the DEAL project.