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As AI data centers drive up electricity prices<\/a>, London-based startup Tem<\/a> thinks AI might be able to help solve it, too.<\/p>\n Tem has built an energy transaction engine that relies on AI to cut prices relative to other energy traders. The company has signed up more than 2,600 business customers throughout the U.K. on the promise that buying energy from its utility division can save them up to 30% on their energy bills.<\/p>\n The startup recently closed an oversubscribed $75 million Series B led by Lightspeed Venture Partners with participation from AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures, TechCrunch has exclusively learned.\u00a0<\/p>\n The round values Tem at more than $300 million, a source familiar with the deal told TechCrunch. The startup plans to use the funding to help expand to Australia and the U.S., starting with Texas.<\/p>\n \u201cWe\u2019re in a nice position where we kind of have control over our own profitability. So I could have chosen not to raise at all and had a lovely, nice bootstrap business in some ways,\u201d Joe McDonald, co-founder and CEO of Tem, told TechCrunch. \u201cWell, we\u2019re not that kind of business. We know what we want to achieve as someone who wants to go public over the years.\u201d<\/p>\n Tem is a classic marketplace play, matching electricity generators with consumers. The company intentionally started by focusing almost exclusively on renewable energy generators and small businesses to fill both sides of the ledger. \u201cThe more decentralized and the more distributed, the better it is for the algorithms,\u201d McDonald said. \u201cBut this works all the way up to enterprise.\u201d<\/p>\n The company\u2019s customers include fast-fashion retailer Boohoo Group, soft drink company Fever-Tree, and Newcastle United FC.\u00a0<\/p>\n Techcrunch event<\/p>\n \n\t\t\t\t\t\t\t\t\tBoston, MA<\/span> Currently, Tem is running what amounts to two different businesses. One, called Rosso, is the transaction engine that matches suppliers with buyers. Here, machine learning algorithms and LLMs help predict supply and demand.\u00a0<\/p>\n The goal with Rosso, McDonald said, is to cut costs by eliminating several layers that are present in current energy markets. \u201cIn each of them, you\u2019ve got different teams doing different jobs, taking different levels of profit from back office to trading, trading desks to other trading desks, and probably five to six intermediaries in total that enable the flow of money to move from one side to the other,\u201d he said.<\/p>\n With AI, he said, \u201cyou now have an opportunity to replace the humans, the labor costs, and the disparate systems into one single transaction infrastructure.\u201d The goal is to make the price that customers pay for electricity closer to the wholesale cost.<\/p>\n The other part of Tem, called RED, is a \u201cneo-utility\u201d built to prove the value of Rosso. <\/p>\n \u201cWhen we first started, we tried to sell our infrastructure to the energy companies, and we got nowhere,\u201d he said. RED is currently the only utility using Rosso, and McDonald said its growth has pushed the company to prioritize it over opening Rosso to others.<\/p>\n At some point, though, Tem plans to allow other utilities in. <\/p>\n \u201cIn reality, it doesn\u2019t matter how good [RED] is; it\u2019s not going to get above a 40% market share. And it shouldn\u2019t, because that becomes a monopoly in itself. So, me, I\u2019d much rather go to get access to all the transaction flow,\u201d McDonald said.<\/p>\n \u201cLong term, we really don\u2019t mind who owns the customer, who owns the generation as long as our infrastructure is being used,\u201d he said. \u201cThis is just an infrastructure play in the same way AWS was, or Stripe was.\u201d<\/p>\n<\/div>\n
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