[Edaily Marketin Soyoung Park Reporter] “Technological capability does not automatically guarantee funding.” This is a common saying in the energy and climate tech ecosystem. This is because technology development takes a long time, and commercialization requires large-scale capital. Consequently, global energy and climate tech startups are adopting a strategy of securing funding by winning long-term purchase agreements and using this as a springboard to reach the scale-up stage.

According to the global investment banking (IB) industry on the 27th, global energy and climate tech startups are securing early demand by signing long-term power purchase agreements (PPAs) or off-take agreements with Big Tech companies and large corporations as their first clients. Based on these agreements, they are trending toward attracting not only follow-on investments but also large-scale growth capital, such as project financing (PF).

An industry insider from the investment banking sector stated, “From a startup’s perspective, this strategy helps secure future revenue and demand in advance, thereby reducing business risks,” adding, “It also makes it easier to secure funding later on, as it allows them to demonstrate commercial viability to financial institutions and investors.”

Take the nuclear fusion startup “Helion Energy,” for example. In May 2023, the company secured Microsoft (MS) as its first customer. The company signed a contract to supply MS with electricity generated at a nuclear fusion power plant.

Subsequently, Helion Energy successfully raised $425 million (approximately 563.3 billion won) in a Series F round last January, followed by $465 million (approximately 616.3 billion won) in a Series G round this past June. With the Series G funding, the company was valued at $15.5 billion (approximately 20.5422 trillion won). The company plans to use the funds raised to expand its fusion manufacturing capabilities in the U.S. and accelerate commercialization.

X-Energy, a company specializing in advanced reactor and fuel technologies, partnered with Amazon through its Series C-1 funding round in October 2024. In that round, Amazon served as the lead investor and provided support for future carbon-neutral projects utilizing X-Energy’s small modular reactors (SMRs).

In addition, Kairos Power, a nuclear technology, engineering, and manufacturing company, signed a contract with Google in October 2024 to sequentially build next-generation nuclear power plants by 2035. The Kairos Power case demonstrates a growth model in which a startup secures major customers before commercialization—rather than building a nuclear power plant and then searching for customers—and simultaneously pursues technology development and facility expansion. Under the contract, the company will develop, construct, and operate state-of-the-art nuclear power plants and sell energy to Google through a power purchase agreement (PPA).

Domestic industry insiders agree that one of the main reasons Korean energy and climate tech startups face bottlenecks is the lack of major customers who will translate technological development into actual purchases. Therefore, they advise that the domestic energy and climate tech ecosystem must emulate overseas models to leap into the scale-up phase and, ultimately, produce energy unicorns.

An official from a domestic venture capital firm pointed out, “We need to adopt a structure similar to that overseas—securing major clients in advance, then raising funds while simultaneously developing technology and expanding facilities—as this will facilitate fundraising and subsequent technological advancement.” The official added, “Therefore, I believe startups need to develop technologies that the market demands—specifically, technologies tailored to large corporations, which serve as strategic clients.”

Meanwhile, Edaily, in collaboration with Korea Electric Power Corporation (KEPCO), will host the “Global Alternative Investment Conference in BIXPO (GAIC in BIXPO)” on November 5 at Multipurpose Hall 1 of the Kim Dae-jung Convention Center in Gwangju, Jeollanam-do. The event will be organized under the main theme “Tech Meets Capital: Energy Deep Tech Scale-up.”

On that day, experts representing the domestic and international energy industries will gather in one place. They will explore ways to scale up innovative technologies in industry and business through the convergence of energy deep tech and global capital. They will also discuss strategies for investment opportunities and corporate incubation.