Venture capital investment in solar startups is stabilising in 2026 after dropping to a decade low last year, according to analysis by Avnet Silica.
A recent study by the electronics distributor found equity funding into the European solar sector reached €82 million ($91.2 million) by the end of August, compared to €24 million across the whole of 2025.
Harvey Wilson, Senior Manager Industrial Vertical Markets EMEA at Avnet Silica, told pv magazine that with a few additional deals closing in the last two months, total funding in 2026 could fall between €90-100 million by the year’s end.
While this year’s investments represent an upward trend, they remain off the pace of 2023, which recorded an all-time high of €285 million.
Wilson explained the surge in investment in European solar tech startups across 2022 and 2023 was most likely driven by energy security concerns, swiftly followed by a market correction through 2024 and 2025.
“The stabilisation we’re seeing in 2026 isn’t an indicator of a full market recovery just yet,” he said. “But it does show that while investors are being selective in a period of more expensive capital, they remain willing to invest when presented with the right opportunities.”
Additional analysis shared with pv magazine reveals PV recycling is the most funded market segment in 2026 so far, receiving €35 million, followed by lightweight PV modules (€16 million), residential PV systems with energy storage (€15 million), solar thermal technologies (€10.3 million) and space-based solar (€5 million).
Avnet Silica’s analysis adds 93% of the €82 million invested by the end of August went to early-stage companies. There were five deals over €10 million in the first eight months of the year, which represented the joint highest year on record for large early-stage transactions.
The median funding round across all stages of European solar startups this year stands at €15 million, which Avnet Silica says is the highest its been in over 15 years. The company’s research says this is a result of venture capitalists focusing on a small number of substantial investments rather than spreading their bets across the sector.
Avnet Silica explains that investors have “largely retreated from the extremes of the investment spectrum”, avoiding both unproven seed concepts and heavy capital demands of late-stage growth, and are instead focusing their capital on “select early-stage opportunities that offer a balance of validated technology and upside potential”.
Wilson told pv magazine the most significant driver of investment in European startups today remains energy security, but also pointed towards ensuring the security and privacy of the hardware, supply chain and the data being transmitted.
He said technology providers in Europe need to be actively adapting to regulations including the EU Cyber Resilience Act and Net-Zero Industry Act if they want to remain viable within the regulated supply chain.
“If European startups can position themselves as a solution to these security and compliance challenges, investors have shown they’re willing to back the right opportunity, and this new regulatory landscape could help close the deal,” Wilson added.
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