Every morning, I find comfort in the ritual of making coffee with a simple drip machine. As the hot water percolated through the coffee grounds, I was reading an article in The Economist about the bumpy road EV startups face in disrupting the established carmaking industry. It was hard not to draw parallels. Just like the coffee grounds are filtered to brew the perfect cup, EV startups must seep through the tough layers of investor scrutiny to emerge as a robust business. This morning's brew got me thinking about a graph used in a recent report to my customer on VC investments in the EV space.

Source: https://tracxn.com
The Charge Begins
Sparking an Idea to Securing the Investment
Our funnel starts full of energy, with 10,638 startups ignited by the prospect of revolutionizing transportation. Yet, the road to securing initial funding proves to be the first big roadblock. Only a fifth – 21% manage to power through. That's 2,236 companies convincing the world that their vision is worth the investment, despite recent reports of falling valuations and the tough truth that building cars isn't as easy as it might seem.
Accelerating to Series A+
At the Series A+ stage, we see a significant drop-off. Only 30% of funded companies reach this checkpoint after about 2.3 years on average. This phase is crucial—it's where startups begin to prove they're not just another prototype, but a viable player in the challenging EV market.
Turning onto the Investment Highway
Series A+ to B+ - Gaining Momentum
Advancing to Series B+ is where dreams either pick up speed or come to a halt. With a 52% transition rate, the 357 companies reaching this stage are those who've managed to sustain their drive in an increasingly competitive space, one where the playing field is becoming tougher than expected.
Series B+ to C+ - The Valley of Death
The pass from Series B+ to C+ is no less demanding, with only half of the companies enduring the journey. These 187 companies have navigated around 3.9 years of development, showing not only resilience but also defiance against the odds, especially as valuations dip and the industry's giants fight back.
Series C+ to D+ - The Final Stretch
By Series D+, we're looking at the trailblazers of the EV world. A mere 98 companies have reached this summit after an average of 4.5 years since their initial funding. These are the frontrunners, pushing forward despite a market that's starting to question the stability and future of EV startups.
Looking in the rear-view mirror
The EV startup funnel paints a picture that's both inspiring and cautionary. The journey from an idea to a tangible, profitable product is fraught with more potholes than many anticipate. Reaching the D+ stage does not mean reaching the finishing line. The industry is realizing that to compete with the heavyweight carmakers, startups need more than just innovative technology—they need strategic prowess and staying power.
While valuations may be cooling, the resolve of these startups should not. They are the pioneers in a sector that has all the potential to redefine mobility and sustainability. Looking at the funnel is just scratching the surface. Below it lies a web of technologies, that have much potential, but also carry high risks. If you are interested in EV startups, or you are yourself behind the driving wheel of such a company, reach out, and together we will ensure that the brightest ideas don't just simmer away but come to a boil, ready to serve the world's needs just like a good cup of coffee in the morning.