Startups face a number of challenges when it comes to introducing their innovative solutions to today’s energy market which really needs new ideas and technologies to face the inevitable energy transition.
Realising that these innovative startups are falling through the gaps and not being given the chance to promote their smart solutions and technology, Rockstart, an Amsterdam-based startup hub, is giving startups a chance to show off their capabilities by offering them a mentorship-driven bootcamp programme called the Smart Energy Accelerator.
Yme Bosma, Rockstart’s programme director, told Engerati in an exclusive interview that the aim is to help start-ups innovate at the intersection of energy and internet technology and to ensure a high success rate. He says, “My role is to make sure that the right startups are being signed up and that links are being made with the appropriate mentors, investors and potential partners.”
The six month programme is made up of 10 startups from across the globe and is run at Rockstart’s office in Amsterdam. The startups, which are all at a very early developmental stage, are assisted by investors and mentors, sourced by Rockstart. The programme draws on a network of about 80 experts who are based in and around Amsterdam for face to face mentorship. Each startup will be connected with up to five mentors, their expertise matching their particular development needs. These mentors commit a few hours of their time to the startup each month.
Rockstart invests €20,000 in each startup from the outset, offers free office space in the biggest startup hub of Amsterdam for six months, access to a big industry network, expert coaching and €45,000 in software and services such as legal, accounting and HR. Rockstart receives eight percent equity of each startup. Rockstart also aims to source funding for the startups before the end of the programme so that they are able to realise their ambitions, explains Bosma.
Startups are beneficial for the energy industry
According to Bosma, startups find it very difficult to bring their solution to the energy market. He explains, “If you look at the energy and sustainability industry, it’s hard to get innovation going. This is mostly due to the fact that the industry is generally dominated by bigger companies which are generally difficult to approach. ou need to know and work with existing big players.”
This is where Rockstart is able to open the right doors for startups.
“We connect them to the right people and the benefit for the industry is that we give innovation a chance. Bigger companies should see this as an opportunity and not as a threat,” explains Bosma.
He adds that large organizations often have difficulty in organizing innovation themselves and rely on companies like Rockstart to connect them to the most suitable startups for them.
There is no doubt that the energy industry faces a number of areas where there is pressure to innovate. For instance, decentralization of electricity generation, renewable energy, energy efficiency, smart grids, and reducing energy wastage, to mention a few. Innovation in these areas is what Rockstart is looking for when they enroll startups for their programme. Says Bosma, “We want to help startups spur that innovation.”
Bosma points out that startups on the programme are not necessarily designing brand new solutions to existing problems but the approaches are highly innovative and are mostly improving on existing solutions. “The themes are not new but the solutions are definitely smarter.”
The challenges of startups
Funding will always be a major challenge for any startup, especially in the smart energy space. It is also very difficult to get products and services to the market without cooperating fully with larger energy companies. This is often the only way startups can get their products and services to the market. It is this cooperation which often makes it easier for startups to get in touch with the right company and people to set up pilots for instance, says Bosma.
“In addition to this, energy entrepreneurs are usually very ideological-driven and not necessarily entirely financially and commercially success-driven as you would see with typical web startups. However, this isn’t a huge challenge – it’s really just a different mindset — but it can be limiting to the impact they could actually have on the world. I think our program really helps founders to develop a very ambitious mentality by demonstrating the real economic opportunities within the smart energy sector. And this is something we do by surrounding them with the best people, the right role models: our mentors.”
Startups and utilities
The relationship between utilities and startups is very challenging, explains Bosma. The reason for this is because utilities are currently under a lot of financial pressure and when they are looking to work with startups, they want to see a potential impact in the short term. Utilities want solutions that will scale-up fast and they want to see a significant impact on their bottom line especially when it comes to cost savings and customer acquisition.
Bosma describes the ‘catch22’ situation: “Utilities wait until a startup has something that will scale up fast whereas the startup has a very significant need to do pilots in order to finalise their products and their hardware so that they can have something that will eventually scale up. There is a gap that still needs to be filled in. It’s a long process but we are trying to educate the utilities to take a more long term approach when they look at start ups.”
Bosma explains that utilities should not wait for startups to develop something that will scale up fast. Utilities need to formulate relationships with the startups from the very beginning and follow their progress. He suggests that utilities create a ‘startups or innovation’ department which recognizes the needs of startups and their potential to innovate.
Startups should respond to trends
Europe’s energy production in 10 years will be 30-40% decentralised, says Bosma. He adds that this will have a major impact on how utilities currently operate and how they will be defined. “I expect to see a lot of virtual utility companies that combine decentralised power. Decentralisation will affect how the grid operates and how transactions are made in the energy market place.”
In response to this transition, Bosma says that it is an opportunity for entrepreneurs to develop new solutions based on the short-term trends they see. A short-term view will help entrepreneurs to easily adapt to a very volatile industry. A long term view may prevent the development of new ideas and solutions, he says.
Rockstart is partnering with the European Utility Week event and is also hosting some events. Bosma says that through this conference, they hope to facilitate meaningful communication between large and small companies. “We feel that there needs to be some bridging activities to ensure conversation is started between large corporations and startups. They don’t know what is possible if they don’t talk to eachother.”
Five startups from the Rockstart Smart Energy Accelerator programme will have booths at the European Utility Week conference and a further 20 have been invited by Rockstart to attend.