British energy startup Bulb has fallen into special administration, making it one of the biggest companies to collapse in Europe's power crisis. The failure of the supplier raises questions over the ability of startups to disrupt volatile markets like energy.
The company, which was founded in 2015 and serves 1.7m customers, has been hunting for fresh investment since mid-September after a surge in natural gas prices sent its revenue tumbling.
Since September more than 20 British energy companies have gone bust, equating to nearly half of the UK market. Bulb is the biggest of those and for many it’s come to symbolise the difficulties faced by "challenger" suppliers.
The company grew fast by offering cheap prices, but had always struggled to make a profit — it reported a £63m loss in the year to March 2020.
The soaring price of natural gas, which has increased 8x since the start of this year, left Bulb and other startups supplying energy at lower prices than the purchasing price. Last week, delays to the approval of the Nord Stream 2 pipeline in Germany sent prices spiking again, which Bulb said contributed to its collapse.
Bulb said in a blog post that it decided to support the move into special administration, which means its supply to homes will continue to operate without interruption.
The company has made several requests to the government in recent weeks to help it structure a rescue package, talks which failed to produce a solution.
A sad end
It’s a sad end for Bulb, which had been crowned the fastest-growing startup in Europe by the FT earlier this year.
The company, founded by Hayden Wood and Amrit Gudka, a former energy trader, has played a big role in shifting UK customers towards greener energy sources. When it launched six years ago, just 25% of electricity generated in the UK came from renewable sources; by 2019, that figure had reached an all-time high of 33%. In March this year, Bulb had grown its share of the UK energy market to 5.9%.
It also has customers in France, Spain and Texas, and is a certified B Corp.
The business has raised $79m, from investors including DST Global, Magnetar Capital and JamJar Investments. It’s unclear what will happen to Bulb’s 800 or so employees.