Tem Secures $75M Series B to Revolutionize Energy Markets with AI-Powered Trading Platform

As AI-driven data centers continue to drive up electricity costs, London-based energy technology startup Tem is leveraging artificial intelligence to address this challenge. The company has developed an AI-powered energy transaction engine designed to reduce costs compared to traditional energy trading platforms.

Tem has successfully onboarded over 2,600 business customers across the United Kingdom, promising energy cost savings of up to 30% through its utility division. The startup has recently completed an oversubscribed $75 million Series B funding round led by Lightspeed Venture Partners, with participation from AlbionVC, Allianz, Atomico, Hitachi Ventures, Revent, Schroders Capital, and Voyager Ventures.

According to sources familiar with the transaction, the funding round values Tem at over $300 million. The capital will be deployed to support international expansion into Australia and the United States, with Texas as the initial U.S. market.

"We're 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," said Joe McDonald, co-founder and CEO of Tem. "Well, we're not that kind of business. We know what we want to achieve as someone who wants to go public over the years."

Platform Architecture and Market Approach

Tem operates as a two-sided marketplace, connecting electricity generators with consumers. The company's initial strategy focused on renewable energy generators and small-to-medium businesses to establish network effects on both supply and demand sides.

"The more decentralized and the more distributed, the better it is for the algorithms," McDonald explained. "But this works all the way up to enterprise." Current enterprise customers include fast-fashion retailer Boohoo Group, beverage company Fever-Tree, and Newcastle United FC.

Dual Business Model

Tem currently operates two complementary business units:

1. Rosso - The core transaction engine that matches suppliers with buyers using machine learning algorithms and large language models (LLMs) to predict supply and demand patterns. The platform aims to eliminate multiple intermediary layers present in traditional energy markets.

"In each of them, you've 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," McDonald noted. With AI automation, the company can "replace the humans, the labor costs, and the disparate systems into one single transaction infrastructure."

2. RED - A "neo-utility" division built to demonstrate Rosso's value proposition. "When we first started, we tried to sell our infrastructure to the energy companies, and we got nowhere," McDonald said. RED currently serves as the exclusive utility utilizing the Rosso platform.

Long-term Infrastructure Strategy

While RED has experienced significant growth, Tem's ultimate vision extends beyond operating a single utility. McDonald emphasized that the company plans to open Rosso to other utilities, positioning it as infrastructure-as-a-service.

"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. So, me, I'd much rather go to get access to all the transaction flow," McDonald explained. "Long term, we really don't mind who owns the customer, who owns the generation as long as our infrastructure is being used. This is just an infrastructure play in the same way AWS was, or Stripe was."

The company's approach positions Tem as a potential platform provider for the energy sector, aiming to bring the same level of technological transformation to energy markets that cloud computing and payment processing brought to their respective industries.