As the rapid expansion of AI data centers places growing pressure on electricity demand and pricing, London-based startup Tem believes artificial intelligence itself can help rebalance the system. Tem has developed an AI-driven energy transaction engine designed to lower electricity costs by operating more efficiently than traditional energy traders. Through its utility business, the company has onboarded more than 2,600 business customers across the U.K., offering potential savings of up to 30% on energy bills by sourcing power more intelligently.
The company has now secured fresh capital to accelerate its ambitions. Tem recently closed 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, TechCrunch has exclusively learned.
According to a source familiar with the transaction, the round values Tem at more than $300 million. The startup plans to deploy the new funding to support international expansion, with Australia and the United States identified as priority markets, beginning with Texas.
Despite the strong investor interest, Tem’s leadership said the fundraising was a strategic choice rather than a necessity. “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,” Joe McDonald, co-founder and CEO of Tem, told TechCrunch. “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.”
At its core, Tem operates as a marketplace that connects electricity generators directly with consumers. The company initially focused on renewable energy producers and small and medium-sized businesses, deliberately building scale on both sides of the platform. “The more decentralized and the more distributed, the better it is for the algorithms,” McDonald said. “But this works all the way up to enterprise.” Tem’s growing customer base includes fast-fashion retailer Boohoo Group, beverage company Fever-Tree, and Newcastle United FC, reflecting adoption across diverse sectors. The business currently operates through two primary components. One is Rosso, its proprietary transaction engine that matches energy suppliers with buyers. Within Rosso, machine learning models and large language models are used to forecast supply and demand dynamics.
The aim of Rosso, according to McDonald, is to remove inefficiencies embedded in existing 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,” he said. By replacing these layers with a unified AI-powered system, Tem believes it can significantly reduce costs. With AI, McDonald said, “you now have an opportunity to replace the humans, the labor costs, and the disparate systems into one single transaction infrastructure.” The long-term objective is to narrow the gap between wholesale electricity prices and what end customers ultimately pay.
As electricity markets face mounting strain from AI-driven demand growth, Tem is positioning itself at the intersection of energy and artificial intelligence, betting that smarter infrastructure can help lower costs rather than push them higher.
