In a new report published today, Redalpine and Sifted outline six technology areas where European startups look well placed to lead. One of these is nuclear fusion.
The race to define the future of energy is accelerating, with the dangers of global warming looming ominously over the planet.
The world’s two energy superpowers are heading in different directions. Under the Trump administration, the US has doubled down on producing oil, gas and coal for export. China, while still the world’s largest consumer of coal, has simultaneously become the dominant supplier of clean energy — from solar panels and batteries to electric vehicles.
Europe's position is more precarious. It lacks America's vast natural resources and has ceded much of the clean technology manufacturing race to China. While Europe is rolling out renewables faster than either rival, it has flooded its grid with solar and wind power that doesn't flow consistently, creating a growing mismatch between when electricity is generated and when it's needed. Batteries can help smooth this out, but only so much.
Europe's need for reliable, round-the-clock power can't easily be met by imported gas, with its geopolitical risks, or by conventional nuclear plants, which carry a legacy of cost overruns and public distrust.
That leaves nuclear fusion — a fiercely contested technology whose breakthrough could redefine global energy markets and geopolitical alliances.
Go big
Fusion offers the most tantalising promise: near-limitless electricity with no carbon emissions and, critically for Europe, a path to energy sovereignty that doesn't rely on owning natural resources. It could power the continent's industries without depending on outside suppliers.
Unlike fission, which splits atoms, fusion welds them together. But the machines to do this are vastly complicated and have to control unimaginable temperatures.
So far, fusion devices — often resembling vast, doughnut-shaped machines — have consumed more energy than they produce. But a new generation of startups has injected urgency, capital and engineering ambition into the field, bringing fusion closer to viability than ever before. Their progress relies on advances in powerful magnets, precision lasers and other emerging technologies.
Though some previously dismissed fusion as flat-out impossible, investors are now staking billions of dollars on it. In 2025, global fusion investment surged nearly 500% to $3.8bn, according to Sightline Climate.
Among Europe’s frontrunners is Munich-based Proxima Fusion. Spun out of the Max Planck Institute for Plasma Physics, Proxima plans to build a stellarator — a device it believes offers the most viable path to commercial fusion.
Last week, the company announced plans to build a demonstration stellarator in Germany and then a commercial fusion power plant, in partnership with the Bavarian state government, energy company RWE and the Max Planck Institute.
The Bavarian government has already committed €400m in non-dilutive financing to finance the stellarator, which will cost €2bn. Proxima says it will provide €400m with money from private investors.
The agreement sends a strong signal that, at a political level, fusion is now being treated as a strategic pillar of European energy sovereignty, says redalpine’s Gianmarco Hodel.
Proxima founder Francesco Sciortino is confident Europe can compete on fusion. “You don’t want to pick a fight with Europe,” he says. “The people, the supply chains, the scientific and engineering depth — it can’t be ignored.”
Fusion comes of age
According to Hodel, fusion’s moment has arrived not because of a single scientific “Eureka” but thanks to the convergence of several technologies. “Critical supporting technologies quietly crossed important thresholds at the same time,” he says.
High-temperature superconducting tapes, once confined to niche research, have followed a trajectory similar to solar panels in the early 2010s — moving from lab curiosities to affordable components. Meanwhile, computational modelling has been transformed by the AI boom: fusion-grade simulations that once required supercomputers can now run on chips made by Nvidia.
Together, these shifts play to Europe’s strengths, Hodel argues: “The US excels at software-speed VC and China dominates mass-volume replication but fusion requires a specific ‘middle zone’ capability: high-complexity precision manufacturing. The winner is not the one with the fastest capital, but the one with the best integration of complex systems. That’s Europe.”
They also coincide with broader megatrends: electrification, geopolitical instability driving energy sovereignty, regulation accelerating clean energy adoption and AI pushing energy demand ever higher. Fusion startups also benefit from fewer regulatory constraints than their fission cousins, which has helped them move faster.
Proxima’s European fusion peers include Munich-based Marvel Fusion, which has raised €385m, and UK-based Tokamak Energy, with $335m in funding. Both are pursuing alternative approaches. Marvel plans to demonstrate its technology by 2032 and deliver a commercial plant by 2036. “There’s incredible momentum to make fusion the European moonshot,” Marvel CFO Nicolas Burkardt told Sifted last year.
The competition, however, is formidable. California-based Pacific Fusion raised $900m in 2024. Bill Gates-backed Commonwealth Fusion Systems has attracted nearly $3bn — more than any other fusion company. OpenAI chief Sam Altman has invested $375m in Helion Energy, which aims to supply electricity to Microsoft by 2028. China, meanwhile, committed $2.1bn to a new state-owned fusion company in 2025.
“The US unquestionably has the most powerful money mobilisation machine,” wrote Sifted editorial director John Thornhill last year. “But Europe still holds strong cards.”
“If this were any other sector — like chips or cars — then I’d be more nervous,” says Proxima cofounder Martin Kubie. “But these other parts of the world don’t have our advantages. The researchers are here. The fact that you can find experienced cryo-engineers in Europe, for example, is because of ITER and CERN.”
ITER, the multinational fusion megaproject, has “accidentally created the world's most battle-hardened” deep supply chain of specialist manufacturers, says Hodel. The German government too has been supportive, vowing to build the world’s first fusion plant.
“Redalpine spent several years diving into the topic of fusion before investing in Proxima Fusion,” general partner Harald Nieder says. “One of the core tenets of our investment was Germany’s global leadership in stellarators, with the current largest version of this technology, the Wendelstein 7, in operation in Greifswald.”
To discover the European startups leading in intelligent enterprise, digital health, space and biology, check out the full report here.
