Fuse exceeds $500m ARR: Alan Chang, Founder and CEO at Fuse Energy

0:00Alan Chang:Hello and welcome to the Scaling Europe show presented by Deal. This episode is sponsored by SurrealDB, the multimodal database for AI agents. Omni, the AI analytics platform trusted by growing companies like Perplexity and Cibesia and VentureComet, the platform that gives startups and scaleups real-time equity tracking, daily business insights and automated management information. Thank you for joining me. Please like, comment and subscribe.

0:32Alan Chang:Hello and welcome back to the Scaling New York Show presented by Deal. I'm Seb Johnson. Today we are in the Fuse Energy offices, Level 39 Canary Wharf, joined by Alan Chang, co-founder and CEO of Fuse. How are you doing today? Yeah, good. How are you? Very good. Thank you for having us. Look, I want to get straight into it. 2025 was a huge year for Fuse Energy. I think you finished the year on over$400 billion of ARR, 10x growth. Where did that growth come from? uh it was yeah mainly from uh yes we we we launched a supply of gas around mid of 25 um and that was mainly from yeah customers looking for a better energy company so it was mainly driven by customer growth amazing what what kind of customer acquisition tools tactics have you been using to try and gain customers you know i saw when you i think was it you went on harry stedman's podcast people were talking about the rest of his the rest is history and how they've seen your advert on there countless times.

1:27Alan Chang:What other channels have you used to acquire customers? Yeah, so for us, it's mainly organic. Obviously, we sponsor. The rest is politics. Yeah, plus paid referrals. Interesting. Okay, and those tactics that you kind of learned from your days at Revolut, was there any kind of growth hacks from there that you were applying? Yeah, so I'd say paid referrals are pretty similar. We also introduced the game of chance in the referrals. You can win up to 150 pounds by spinning a wheel every friend you refer. But yeah, like otherwise, yeah, a lot of those learnings from Revolut. And is that something that like most customers end up referring somebody else?

2:10Alan Chang:You end up with like power users of people who end up getting like 50 referrals to try and spin the wheel as often as possible? Yeah, we certainly have a lot of users referring like 10s and not 20s of people, yeah. Amazing. And you talked about gas. How big was that in unlocking growth? Yeah, it was pretty big. Like, to the context, roughly 85 % of wholesales in the UK have gas. Yeah. So that was roughly a 5x increase in address for market. Wow. But for some reason, we saw more than 5x increase in growth. Amazing. Wow. Okay. And when you, I've seen you talk about the way that you are beating or winning against incumbents is on price, product and service.

2:50Alan Chang:For the customers that come on board, is there one of those three that really stands out that they're particularly convinced by? I mean, obviously price is definitely number one for top of mind for a lot of customers. But I think price is what people come in for and product and customer service is what people stay. And do you see much churn? Very minimal. Very minimal. Nice. And that was 2025. How's 2026 been? We're two months in. How's growth looking? How's the results been? We've already exceeded 500 million. Amazing. annualized revenue um yeah and so far we've grown roughly 30 percent this year um so we're on track for for another big year this year yeah and there's there's a bunch of new new things coming coming 2026 and are you happy with the performance of the start of the year or did you want more no no could be could be much better yeah um but it's it's okay i guess where do you think you're leaving growth on the table then like where could you have been better in the last couple of months i mean ultimately our growth is constrained by talent um you know we i'd say like we can grow much much much faster if if we can double triple our engineering team today amazing um yeah so we're not capital constrained at all we're just you know engineering talent constrained what do you look for in an engineer yeah top engineers you know i mean i'll ask me you know If you take software engineers as an example, right?

4:16A good software engineer is effectively just a good problem solver, right? And a really good software engineer can go very deep in the domain, really understand requirements, and write software that can meet those requirements, right? And you'll be surprised that it's quite rare to find a software engineer that can solve problems because in all of these big companies, as a mediocre engineer, you can get away with just, you see a Jira ticket or a Celiina ticket you just build software against that without understanding the underlying problem and more often than not it doesn't really solve the issue so what we're looking for is engineers that can go very very deep understand the domain and build against that.

5:00Alan Chang:And how do you assess that in the process? It's a combination of we do a live coding exercise as well as we go deep on historical problems they solved and whether they actually solve the problem. And you'll be surprised. Like there's, you know, engineers that you ask them, okay, what is the most complex problem you solved? And, you know, they explain to you and they actually didn't solve the problem.

5:32So, yeah. So I think it's a combination of, yeah, life skills assessment as well as going deep on a historical problem.

5:39Alan Chang:And are you seeing, you know, you mentioned that like engineers from corporates can, you know, go through their career without ever solving a problem. Are you seeing certain profiles of certain companies that are creating great engineering talent? Are you looking at like AI companies and maybe their ML engineers are great better? Are you looking at very early stage startups? Are those engineers better? Is there a profile that you've seen that it does develop great engineers? Actually, there hasn't been a profile we've seen, right? We're finding great engineers everywhere. I mean, we are finding great engineers.

6:09For example, we hire a lot of great engineers from hedge funds or HFTs, but then there's also a distribution of good and bad engineers. This is also true for AI companies. We've seen engineers that are not so great working at these big AI labs. So I think it's always like there's a distribution of top engineers and mediocre engineers in every company. You just need to, yeah, assess one by one.

6:41Alan Chang:How quickly do you realize if you've hired a bad engineer? Roughly 80 % of engineers we hire we are very happy with. Yeah. Maybe closer to 90, 80 to 90. and we usually realize within a month, sometimes less. Yeah. Is there any specific traits or characteristics when they go through the recruitment process that is an immediate red flag? Yeah, so there is two things we assess. First are the hot skills, which is the engineering skills we're looking for. The second is more like the attitude towards you know um you know do they like ultimately what we want to do is we want to hire like not only great engineers but engineers that care um like that deeply care because sometimes you know shit hits a fan and uh you know you just need to quickly fix something and what you don't want to do is like you know you have an engineer that's on call and just don't care right and just like okay i'm i'm done today i'm i'm going home right so you want to hire engineers that really really care about the problem you're solving.

7:51And yeah, so it's a combination.

7:55Alan Chang:And you mentioned problem solving for engineers. Is that like the key characteristic or trait that you look for across anybody joining any part of the business? Or is it like a certain trait that you really hone in on? Yeah, I mean, ultimately, like, we are hiring problem solvers, right? Like, you know, whether it's, you know, engineering or not engineering, we are hiring problem solvers. and yeah it's just like what type of problem are they good at solving a specific problem and how effective are they right it's as simple as that and if you could give somebody some advice for somebody who wants to work at Fuse Energy like how can they stand out how can they get your attention to be honest like my attention doesn't really worth doesn't mean much here like we have a process pretty robust process that we evaluate every individual and you basically get, yeah, and yeah, if you meet the bar, you meet the bar, right?

8:54So it doesn't matter whether you get my attention or not.

8:59Alan Chang:Which way you come into the process. Yeah, interesting. And so that's been the biggest constraint on you right now is talent. Getting talent can unlock more and more growth. Yes. At the current rate, I assume you're on track to surpass a billion this year. Yes. and when you look at that growth where do you think that's going to come from? Is it customer acquisition? Is it gas again? Is it you've got product expansion lined up? We've got market expansion lined up. Where do you see growth coming from in 2020? Yeah, so we are expanding to Ireland and the US this year but we don't expect meaningful revenue contribution from those markets at least this year.

9:36We are also launching new products like Microsoft and Battery products that we're launching towards the end of this year. So, but again, we don't expect, you know, these new products and new markets will take time to, you know, have a meaningful contribution to the company. But I'll say like the key thing for us is she'll be continuing scaling a core market in the UK.

10:00Alan Chang:Yeah, got it. Okay. But at the same time, take, yeah, take big bets on new markets and products. And when you decide that roadmap of either new markets in the US and Ireland or new products, in the sense of the hardware, how are you deciding what to build and where to launch? US is a large market. The Microsoft and battery solution is like, it'll have a roughly three year payback. It's going to cost about 2000 bucks. It's a no brainer for a lot of people. So we're just doing the obvious things. Right. Like we just know, like the other thing about in energy or in utility in general is if you do something useful, like people use it, right?

10:45You don't really have to think about product market fit. Yeah. Right. So it's really like, is the market big enough? Is this a problem big enough for us to solve it? And if we don't say yes, then we just do it.

10:56Alan Chang:Yeah. I mean, it's interesting because you say both of those things are obvious. I think from an outside looking in, US energy prices are actually lower than probably most of Europe That's correct, yeah I don't think most people would assume that actually US is the obvious one But the Americans use roughly eight times more power than Europeans So it's the volume Yeah Think about all the big houses, the swimming pools, the personas Yeah, it's expensive Yeah, interesting And the same with the hardware I mean, when you explain it, it makes sense But it's not something that traditional energy incumbents have done Yeah Like it hasn't been obvious to them why do you think it's been obvious to you and not to them well I actually don't know whether it's obvious to them or not but whether even if it's obvious you still need to act on it and I think it's a usual it's very hard to have high agency in a big company where there's multiple decision makers and you know the decision makers are too scared to make a decision so yeah we just you know analyze a problem, find best solution to problem, build solution.

12:04That's it.

12:05Alan Chang:Agency is obviously something that comes through in the culture of the company externally. You've scaled the team rapidly. How do you maintain that culture of agency and execution as you grow? We actually haven't scaled a team that rapidly. So if you look at this time last year, we were roughly just over 100 people. So we've grown roughly two times in headcount. so I wouldn't say we grew a lot in terms of headcount so yeah like we like just to give you an idea we have over 10 people in a recruitment team and majority of them are focused on engineering hires but we make 2-3 engineering hires a month, we love to make a lot more but that's just the number of engineers that we're finding right now that meets our bar How do you think that's going to change over the course So this year, you know, as you go from, you know, 400 million, 500 million to a billion.

12:58They kind of decouple revenue growth. Yeah. Like you can think of, the way I think about it is like when you hire a talented person, it's going to take, you know, years for us to recoup our investment, right? So even if you hire, you know, even if I double the engineering team tomorrow, we're not going to see returns on that for a while at least in the short term we're simply investing a long term so yeah like what I wish we did was triple the engineering team last year so we're going to see a much higher revenue this year.

13:39Alan Chang:And are you trying to factor that in this year then? Is that why you've got a recruitment team of 10 people? Yeah we're trying to triple the recruitment team so we can but again hiring a great recruiter is also quite difficult hiring anyone great is very difficult and how are you thinking about basing the team as you look to expand internationally are you looking at talent in the u.s are you going to say everything here in london we're already hiring everywhere wow amazing we are already hiring like any talented person in the world right now we would we would want to hire so and if they want to relocate we help them relocate if they don't want to relocate they can say where they are amazing the bar is just that high wherever you are yeah we'll take you interesting um i want to talk about the the two rounds that you raised last year right so you went from you kind of became a unicorn like summertime i'll correct that we actually raised around 24 that was just announced in 25 interesting okay fine and then well yeah very quickly after it was announced yes you then raised the five billion dollar valuation yeah what happened in between those two was that was the second round already ongoing when you announced the first round or it came off the back of that and preempted how did that come about it was um yeah it was led by our existing investor lower carbon yeah and boulderton so i mean yeah they they were investors um in us from from day one um so i guess they like what they saw so they they wanted to get ahead of it yeah and how did you find that process of raising that money then because i mentioned it was very easy but were the negotiations around valuation how did that play out fundraising is very you know time draining as i'm sure a lot of entrepreneurs say the same thing um they are like trying to manage you know multiple stakeholders and make everyone happy is it's painful you don't enjoy it no you much prefer running the business itself i'm saying yeah um it seems like you've been actually you've raised relatively low, a low amount of capital for the business that you're building, which is both a combination of like hardware, software, the full stack.

15:50Alan Chang:Have you invested a lot of your own money into this? Like how have you managed to stay relatively capital constrained? By building a profitable business. Yeah. So as of December last year, we've been profitable ever since. Amazing. So we're generating, you know, single digit millions in profit a month. Amazing. And is that going to be a priority for you going forward? Is it important for you to maintain that profitability level? I think for us, it's actually not that important. We're happy to take a three-year, five-year, seven-year view on return on investment. So if it means going back to unprofitability, we will do it.

16:35That being said, as I said, talent is a constraint, not capital. I wish we were capital constrained, right? I wish I could be like, okay, let's raise a billion dollars and we'll go 10 times faster, right? Like, reality is if there's a billion dollars in the bank account, like our speed would not change. So yeah, so whilst in theory that's true, I don't think it will happen.

17:00Alan Chang:Yeah, interesting. I mean, your ARR per FTE must be crazy, right? Like, what is it? Two million? Two and a half? Something like that? Something like that, yeah. That's insane. I mean, yeah. Have you tried to take a capital constrained view of everything outside of talent? You know, have you been frugal in the way that you've, I mean, it sounds like marketing hasn't been a big expenditure. I'll say like we are very, very cost conscious, right? Like we have very, very rigorous cost controls. And I would say our cost discipline is much higher than the average startup. Interesting. one of the quick five questions I wanted to ask you was throughout your journey as a founder what has been the biggest waste of money you've ever spent I'm trying to trace back the last few years what mistakes they make I don't think I made any I don't think I made any costly mistakes not super costly like there's obviously like you know I can probably find I think a couple of examples where it's like 10-20 grand that is you know stupid yeah like for sure but like i don't think we made any like very like super costly mistakes interesting it'd probably be talent right like bad talent it's probably been yeah but even bad talent like you realize pretty quickly so true yes so i'll say it's like more like a time cost than a financial cost yeah interesting has there been a standout decision that you've made that has been the biggest driver of roi yeah i can't think of a apart from top team i can't think of another answer that's it top team yeah interesting all right yeah i mean i guess you haven't invested in marketing in the same way that other companies have where i guess the risk is that you kind of burn a lot of cash or making a huge roi on it um back to the raises is this something that you looked for very early on in a vc partner were they're like because i know bull to more obviously a big revolute backer was that did that was that good for you or was there certain things that you were looking for?

18:58Alan Chang:Or is your view that like VCs are probably not that value-add, whatever? I think I've actually changed my mind on that. Like if you asked me, you know, two years ago, I'd probably give you an answer like VCs are not that value-add, like money's money. But you asked me today, I think beyond money, it's important to find an investor that is, you know, to have high EQ.

19:29and that is willing to understand your business yeah because yeah like what's worse than no value add is like negative value add

19:40Alan Chang:yeah and yeah I've just seen more and more um yeah bad examples of VCs um so yeah like basically beyond the money work with people you like interesting that's the most important thing yeah you think you've got good investors like that that you get on with you like i would say so yeah yeah okay and i saw that uh quantum light came in in the last round as well what was that like raising from kind of nick's fund was that like a nice full circle moment was he you know was it a tough negotiation what kind of investment process was that like i've said publicly many times i've a lot of respect for nick yeah um but yeah like uh yeah it took him a while but yeah i'm glad uh i'm glad they're on the cut table amazing i want to talk about europe more generally european tech um how well positioned do you think europe is the european ecosystem is currently to build tech giants i'm cautiously optimistic yeah okay interesting why cautiously and then why optimistic the biggest talent competitor of europe is is obviously the us and if you look at all the top founders from the US, a lot of them are Europeans.

20:53So in the US you have much larger talent market, much larger and wealthier consumer market.

21:04There's less and less strong reasons to build in Europe. At the same time, Europe still has a lot of great talent. I think it's a no-brainer to always build office in Europe and how a great engine is but Europe is making it very hard to build there's so many bureaucracy policies that don't make sense and if you're entrepreneur you just wait out the pros and cons the cons are going and I mean I would say pros is still like larger than cons today yeah but you know it's very very

21:51Alan Chang:close to to go the other way interesting and when you talk about bureaucracy and policy is there a specific bit of policy that maybe specifically for Fuse or the ecosystem more broadly that you'd either implement or rip up tomorrow yeah I won't implement any more policies but I would delete a lot of policies. So what I would do is I'd go line by line on every existing policy and delete anyone that makes sense. It doesn't make sense. Outside policy bureaucracy, what do you think we as an ecosystem found as investors, operators, what can that level of the ecosystem do to try and take tech to the next level?

22:28I think just dream bigger, right?

22:30Alan Chang:Dream bigger. I mean, a good example is like raising from a European VC and obviously this is not true for every European VC right but I'm generalizing a little bit but raising from the median experience with the European VC is you know like neutral to negative for example let me give you an example right I've been asked this question like basically you know I pitched a company this is a plan blah blah and then the first assumption this European VC made is like but how is it possible to build a trillion dollar company in the UK. But I'm like, but we will expand beyond the UK and we're going to go to more markets, blah, blah, right?

23:15And it was just so, like, she just, like, this VC just could not understand, like, just could not imagine, like, you can go beyond the UK, right? So I just, like, look, and I just stopped the call earlier, like, look, I'm not going to waste some more time. Like, look, you know, we're going to spend our time on, investors that actually at least can believe there's a possibility that's gonna happen right

23:40Alan Chang:that's crazy it feels like they're in the wrong job right you can't imagine a trillion dollar outcome and i can tell you this is like a top tier top tier vc like a brand name vc that's wow but it was like um yeah it was like very very disappointing right um and whereas the median experience in for us vc like even if they you know say no right eventually but like at least they can you know you can have a level conversation like okay this is a possibility blah blah right and they can at least like you know see a glimpse of that could happen right so even as simple as this like just like this difference in attitude is just like okay like next time i fundraise like why do i even bother european vcs right i just know you know most likely the experience will be negative right obviously like you know there's exception to every role like you know there are some great european vcs out there too yeah um but yeah like it's just like you know why are you doing this job what else do you think they need to do to improve you know is it is it about being able to dream big and see the vision you know there's that classic meme of like always caring about financial results and a financial model does that play out in reality like what other things are european vcs doing that is like a bit like ultimately i think as a vc you need to be like or any investor you need to be risk neutral right and especially in the VC class, risk neutral basically means that you need to invest in outlier outcomes.

25:12And if let's say a company pitches you, I always use this example, but no disrespect to B2B SaaS, is a you know if you get pitched b2b SaaS versus like you know building this like you know potentially number one company in this you know category right large category um I think European visas

25:33Alan Chang:would like the b2b SaaS company more right the safe bet yeah when you look to future capital do you think you will be looking to the US especially given that you're going to be you know expanding across that market I mean reality a lot of European VCs money actually come from the US anyway. Yeah, it's true. Right? So, you know, does it really matter who the GPs are? Yeah, yeah. And it's one of the things that really bothers me is that like we celebrate European VCs and it's like all of your LPs are American. So all the value is captured and transferred to there anyway. Yeah, so, I mean, if all the captors are basically the same then I prefer working with a GP, you know, that I like, right?

26:12Alan Chang:Yeah, interesting. And you've obviously raised a lot of money. You're now, you're profitable anyway. at what point do you think you're going to be if you will need to raise again like is it going to be for big hardware infrastructure projects like when are you going to think about recapitalizing no plans yet right now we just focus on it's a long way away yeah building the company interesting i want to touch on two things that you've sort of teased is like you've talked about recycling you've talked about fusion as like possible things you know way down the roadmap why are those two areas areas that you're interested in let's start recycling uh it's a very energy intensive industry um and essentially like like our core business is low cost power and if you're able to if you have access to low cost power you can basically reduce the you know unit costs of recycling and therefore you know build a competitive vantage right so it's always been our plan to start with power but then go downstream well downstream of power yeah and also go upstream of power to lower the cost of power but go downstream to not only sell power for cheaper but you know get the benefit ourselves so leverage the cheap power to to build things that are like could that be like data centers data centers is one area we're looking at interesting um but no plans yet i saw the european directive that wants all um data centers to be carbon neutral by 2030.

27:53Not gonna happen.