Hustler Words – As the burgeoning demands of AI data centers increasingly strain global power grids and drive up electricity prices, a London-based startup named Tem is harnessing the very technology causing the surge to forge a solution. The company has successfully secured an oversubscribed $75 million in Series B funding, a development exclusively learned by Hustler Words, aiming to revolutionize electricity markets through its innovative AI-powered energy transaction engine.
Tem’s platform leverages artificial intelligence to optimize energy transactions, promising significant cost reductions for businesses. The company’s utility division, which facilitates direct energy purchases, has already attracted over 2,600 business customers across the U.K., offering them potential savings of up to 30% on their energy expenditures. This impressive traction underscores the market’s urgent need for more efficient and cost-effective energy procurement.
The substantial Series B round was spearheaded by Lightspeed Venture Partners, with notable participation from AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures. This fresh capital infusion values Tem at more than $300 million, according to sources familiar with the deal. The startup has earmarked these funds for ambitious international expansion, with plans to enter the Australian market and establish a foothold in the United States, commencing with Texas.
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Joe McDonald, co-founder and CEO of Tem, shared insights into the company’s strategic position with Hustler Words. "We’re in a nice position where we kind of have control over our own profitability," McDonald stated, indicating the company’s robust financial health. He added, "We know what we want to achieve as someone who wants to go public over the years," signaling long-term ambitions beyond mere startup growth.
At its core, Tem functions as a dynamic marketplace, intelligently connecting electricity generators with end consumers. The company initially focused on fostering a decentralized network, primarily engaging renewable energy generators and small businesses. This strategy, McDonald explained, is optimal for their algorithms: "The more decentralized and the more distributed, the better it is for the algorithms. But this works all the way up to enterprise." Tem’s growing client roster includes major players like fast-fashion giant Boohoo Group, soft drink producer Fever-Tree, and professional football club Newcastle United FC.
Tem operates through two distinct yet synergistic business units. The first, Rosso, is the sophisticated transaction engine itself. Utilizing advanced machine learning algorithms and large language models, Rosso accurately predicts energy supply and demand. McDonald elaborated on Rosso’s disruptive potential, noting its ability to streamline the complex, multi-layered existing energy markets. "In each of them, you’ve got different teams doing different jobs, taking different levels of profit… probably five to six intermediaries in total," he explained. By replacing these human-intensive processes and disparate systems with a single, AI-driven infrastructure, Rosso aims to bring the price customers pay for electricity significantly closer to the wholesale cost.
The second unit, RED, serves as Tem’s "neo-utility," initially conceived to demonstrate Rosso’s efficacy. McDonald revealed that early attempts to license their infrastructure to established energy companies proved challenging. Consequently, RED was developed as a proof-of-concept, and its rapid growth has led Tem to prioritize its expansion. While RED is currently the sole utility leveraging Rosso, Tem’s long-term vision extends beyond its own utility arm.
McDonald envisions a future where Rosso becomes a foundational infrastructure for the broader energy sector. "In reality, it doesn’t matter how good [RED] is; it’s not going to get above a 40% market share. And it shouldn’t, because that becomes a monopoly in itself," he asserted. "So, me, I’d much rather go to get access to all the transaction flow." Ultimately, Tem aims for widespread adoption of its infrastructure, regardless of who owns the customer or the generation assets. "Long term, we really don’t mind who owns the customer, who owns the generation as long as our infrastructure is being used," McDonald concluded, drawing parallels to the transformative impact of infrastructure giants like AWS or Stripe.
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