Infratech: Europe's Next Big Wave

One company at the infratech Ripple has a proven district-heating technology and commercially sound projects, and infrastructure funds want to buy the plants once they are built. What it cannot find is money for the stretch in between. Each project costs about €10 million, and nobody at a pension fund, its founder said, wakes up in the morning wanting to fund something that small. "Everyone keeps telling me we're the wrong size ticket." Even the European Investment Bank found it too small.

The session took that gap seriously. What it kept finding was that money is only one of the brakes.

Owning the hardware

Borja Gumuzio Morenés of Resilient Infratech Fund began with history. Every leap in technology, from Rome's aqueducts to the telephone, has been followed by a wave of infrastructure building, and clean technology and digitalisation are driving the next one. Europe has the ideas, Borja said, pointing to the universities of Oxford and Cambridge. Yet the Draghi report warned that European companies keep moving their headquarters to the United States.

The trap, as Borja described it, is circular. A start-up cannot raise equity without financing for its first plant, and cannot finance the plant without equity. Europe has enough capital in the market, the host said. How it is allocated is the problem. Borja's fund invests in the missing middle, from Series B to Series C, and buys the hardware into parallel SPVs, which supply the customer under a service contract. The aim is to go to private equity or the EIB with three or four years of assets running instead of a technology. If a company fails, the fund keeps the assets. In one write-off it had invested €2 million, the SPV held about €1.3 million in assets, and investors lost about €0.7 million.

a pilot costs 20,000 euros because that's all the money we'll ever see.

China speed

Nick de la Forge of Planet A called the first-of-a-kind financing gap a great working hypothesis, because pension funds put little into venture and other high-risk assets. But well-funded companies such as Northvolt have failed anyway, and Nick did not blame mismanagement alone. Supply-chain turnaround times and procurement costs are systemic problems.

A founder in industrial biotech gave the numbers. A pilot is quoted at about six months in China and 18 in Europe, where the auxiliary supply chain does not exist. De la Nick said Chinese suppliers deliver in about a third of the time and at a third of the cost, with acceptable quality. Planet A advises its portfolio to source there safely, splitting a product into subcomponents from different suppliers to protect IP. Without China speed, Nick said, a hardware start-up cannot survive unless it does something very specific. A participant from a power-electronics start-up drew the line at passive parts such as battery and solar cells, which come from China, while the active control is built in Europe.

Investors on the two sides of the Atlantic ask different questions, according to one participant from an infratech start-up. Americans want to know how fast a company can go and whether its supply chain is secured. Europeans ask about risk, and investors who cannot judge the technology fall back on software metrics such as recurring revenue. For infratech, that shows where a company stood 18 to 24 months ago, because revenue follows demand.

A year for an NDA

Only five companies in Germany's DAX index were founded after the Second World War, Nick said, and one Planet A company has spent a year negotiating an NDA with one of them. That does not happen in the US or in China.

The power-electronics start-up saw getting unknown brands into large projects as the second-biggest risk after funding, and data-centre buyers usually pick the largest vendors. NATO's DIANA programme had let the company bypass defence procurement, sign a contract with an armed force and be treated by defence contractors as an approved supplier. Infrastructure needs a fast track like it. An angel investor wondered whether some corporates set up innovation departments to park people with no power. Their start-up had run pilots free for end users, but for an innovation department, "a pilot costs 20,000 euros because that's all the money we'll ever see."

Investors disagreed about how much the middle matters. One who invests on behalf of two corporates said the US still struggles there too, so plugging the gap would put Europe ahead. Another called that too simplistic. In Germany, money flowing into the missing middle has raised the bar at pre-seed. A European pre-seed round is a tenth of its American equivalent and has to last 18 months instead of six. A growth investor from outside Europe had made ten of eleven investments in the US.

A participant working on grid technology asked the obvious question. If an NDA takes a year, should start-ups raise more for a longer runway? One of the hosts called their own answer unsatisfying. Be clear which corporate you want, and use reference calls to work out which buyers adopt early and which will only waste your time. Nothing, the host said, works across the board.

This Ripple was hosted by Borja Gumuzio Morenés (Resilient Infratech Fund) and Nick de la Forge (Planet A) at The Drop 2026 on 16 September.