Despite a significant rise in global energy demand, investment in energy-related startups has hit a four-year low in 2025. According to The International Energy Agency, global power demand surged by 2.2% last year, significantly higher than the average annual increase over the previous decade. Factors like the increasing energy consumption from AI platforms, growing power needs in emerging economies, and rising use of air conditioners due to intensifying heatwaves are all contributing to the expected continuation of this upward trend in demand.
You might expect this to translate into higher investment in energy startups, but that’s not the case. Crunchbase data reveals that investment in energy startups reached its lowest point in four years this year, with Q1 of 2025 seeing the lowest figures in the past five quarters.
However, there are signs of a slight rebound. In April, energy investment picked up after a slow start in Q1, with notable rounds of funding secured. Silicon Valley-based Mainspring Energy, which focuses on onsite power generation systems for businesses, utilities, and data centers, closed $258 million in Series F funding, led by General Catalyst. Additionally, Nashville-based Silicon Ranch, a major player in utility-scale solar installations, secured $500 million from European infrastructure investor AIP Management. Austin’s Base Power raised $200 million in Series B funding to provide residential battery backup power.
While investment in traditional energy companies remains relatively low, ventures that focus on energy efficiency or infrastructure are seeing better funding. A prime example is The Stargate Project, a joint venture between OpenAI, SoftBank, Oracle, and MGX, which plans to invest $500 billion over the next four years to build AI infrastructure in the U.S. Stargate is focusing on multigigawatt infrastructure tailored to AI’s power needs and is already investing $100 billion in these efforts.
Despite recent investment slumps, there’s room for optimism. Energy startup investment, particularly in emerging fields like fusion, is likely to rise as the demand for power grows. Even modest improvements in investment could spark a notable uptick in the industry.
