- Tesseract, a renewable energy startup founded by ex-Revolut employees, is set to raise fresh funds.
- The startup is nearing a $30 million pre-seed round from the likes of Balderton and Accel, sources say.
- Ex-Revolut CRO Alan Chang and special projects lead Charles Orr founded the business.
A renewable energy startup founded by former staffers at fintech giant Revolut is set to raise $30 million in pre-seed funding, sources said.
London-based Tesseract aims to “fix” the energy sector by selling sustainable power to households and businesses through blockchain-based transactions. The startup is still in stealth mode while its cofounder and CEO Alan Chang serves his six-month notice period at Revolut, where he was the challenger bank’s fifth-ever employee and chief revenue officer.
Chang is set to close the round that will include backing from the likes of Balderton, Accel, and Creandum at a $150 million post-money valuation, two sources with knowledge of the deal told Insider. It is not understood whether or not the deal has closed yet and figures could be subject to change.
Tesseract did not immediately respond to a request for comment.
Little is known about Tesseract’s business model, however, sources familiar with the business expect it to operate as a vertically integrated renewable energy company, akin to that of UK company Bulb, which went out of business in late 2021.
Bulb bought renewable energy from generators in the UK through deals called power purchase agreements (PPAs), which were long-term contracts that enabled companies to buy electricity at a fixed price and then offer the energy to consumers to power their homes.
Tesseract also aims to raise a further $100 million from the sale of tokens, which it will use to fund the acquisition of renewable energy, according to an internal document seen by Insider. The startup will offer 70% of its available tokens via a $20 million first close with the remaining tokens available in a second $80 million close at a later date.
“Tesseract requires significant funding to develop, launch, and grow. The proceeds of the pre-sale will be used to seed the network with highly optimized renewable energy,” the document said.
These Tesseract tokens are being offered to investors who can buy the offering in a number of fiat and cryptocurrencies.
Within the context of blockchain technology, tokenization is the process of converting something of value into a digital token that’s usable on a blockchain application. For Tesseract, the token will serve as a PPA with no expiry date. Each Tesseract token corresponds to a right to access power targeted at 1 watt of capacity on the company’s network, per the documents. This would appear to work in the same way that USDC, a stablecoin, is pegged at the value of $1.
Insider was the first to report that Chang was leaving Revolut to found a Web3 business in March. At the time, Chang, who was seen as CEO Nik Storonsky’s right-hand man, mentioned that his startup would focus on the “tokenization of renewable energy.” Alongside Chang is Charles Orr, a former strategy lead at the fintech startup.
One London-based VC investor who was pitched by the company indicated that the energy market was highly regulated and that consumers are much less incentivized to switch providers than in other sectors. Another investor, who passed on the deal suggested that the current crisis in energy markets prompted by Russia’s invasion of Ukraine and high gas prices had made the sector highly capital intensive and difficult to navigate.
Chang spent seven years at Revolut and public records valued his vested shares from the business at over £30 million ($40 million). Insider understands that a portion of Chang’s own wealth has been used to initially establish the business. The company’s website is currently offering 18 jobs including a head of crypto, M&A functions, and law.
Separately, another crypto-enabled firm called Tesseract already exists in Finland and offers a crypto lending business.