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Fuse Energy, a UK start-up founded by former Revolut executives, is in advanced talks to raise new funding at a valuation of about $5bn, which would mark a fivefold increase from when it raised money four months ago.
The company is trying to position itself as a fast-growing player in the UK energy sector by providing cheap power to consumers and developing its own renewable power assets, such as solar panels. It is aiming for $100mn in the latest round, according to people familiar with the matter.
US-based investment fund Lowercarbon Capital is set to lead the round, which will also include the UK’s Balderton Capital, the people said. The firms backed Fuse in an investment round that valued the company at about $1bn in July.
Fuse, founded in 2022, said in a third-quarter update that it served over 200,000 households, who saved as much as £200 annually from its tariffs that seek to beat the UK price cap. The company, which also offers services such as electric vehicle charging, said it was generating $300mn in annual recurring revenue.
Investors in Fuse have been attracted in part by the company’s speed in rolling out new products, one of the people familiar with the process said.
The proposed $5bn valuation for Fuse compares with the $9bn achieved by much bigger rival Octopus Energy when it raised fresh funding last year — a 15 per cent increase from a previous round six months earlier. Octopus reached 10mn retail customers globally last month and has software that it is licensing around the world.
Fuse was founded by chief executive Alan Chang, formerly chief revenue officer at Revolut, and chief operating officer Charles Orr, who was also an executive at the UK financial technology group.
The company previously raised $100mn from venture capital investors including Lakestar, Accel, Creandum and Ribbit. In recent weeks, Fuse said it had built its first solar farm in Hampshire.
Fuse’s increased valuation has come even as some of the UK’s newer energy suppliers have struggled to meet capital adequacy targets.
The targets were introduced by regulator Ofgem to try to prevent a repeat of the energy crisis that began in late 2021 and led to about 30 suppliers collapsing because they could not withstand surging gas prices.
Ovo, one of the largest suppliers in the UK with about 4mn households, has been given more time to meet its capital buffer targets as it seeks to raise funding, the Financial Times reported earlier this month.
Lowercarbon, led by managing partner Chris Sacca, has invested in other British companies such as the carbon removal registry Isometric. Balderton was one of the earliest backers of Revolut and a top early backer of Fuse.
Fuse and Balderton declined to comment, while Lowercarbon did not respond to a request for comment.
Additional reporting by Rachel Millard