Bulb Energy was once the fastest-growing supplier in Britain’s energy market, and one of the UK’s most celebrated startups.
But the company may be best remembered as the biggest casualty of the energy market crisis after it handed the responsibility for supplying gas and electricity to 1.7m homes to a special administrator on Monday.
Its collapse marks a catastrophic fall from grace for a company that in the space of six years won the approval of government ministers and catapulted its chief executive, Hayden Wood, to leading positions in a string of business initiatives including the government’s Council for Sustainable Business.
The company was founded in east London in 2015 by early-thirtysomething entrepreneurs Amit Gudka and Wood with the intention of challenging the remaining dominance of the energy industry’s legacy supply giants. Gudka had eight years’ experience trading electricity and gas at Barclays, and Wood had 10 years as a management consultant, first at Monitor Group and then at Bain & Company.
Within six years the company claimed 6% of the energy market, and helped to pioneer a number of tech startup campaigns including the government’s kickstart scheme for unemployed young people, and the Tech Zero climate taskforce in June this year.
Wood, 38, gravitated towards the limelight, appearing at events alongside ministers such as the business secretary, Kwasi Kwarteng, and hosting Boris Johnson at his London headquarters in July. As one of a handful of executives on the Council for Sustainable Business, he advised the Department for Environment, Food and Rural Affairs (Defra) on making companies greener.
Bulb’s rapid ascent was powered by early backing from investment fund DST Global, owned by the Russian billionaire tech investor Yuri Milner, and Magnetar Capital, and it hoped to grow its business beyond Britain’s borders to reach more than 100 million “members”, its preferred term for customers, by the end of the decade.
Instead the company burned through its cash while posting successive financial losses, as fresh concerns over its funding, “toxic work culture” and rising customers complaints began to emerge. By February this year, Gudka left the company to start a new battery firm. And, by June, Bulb was forced to seek a reprieve on its loan repayments by lenders, including Milner.
The company’s collapse came as little surprise to anyone in the energy industry.
“Sadly, today’s news has been a long time coming,” said Keith Anderson, chief executive of ScottishPower.
“If we are to learn anything from this crisis, it is that we need a sustainable and responsible supplier market in which companies are able to withstand market shocks. The government now has a vested interest in working the industry and the regulator to ensure this happens.”
Bulb’s major strength was its marketing: it excelled at attracting new customers through lucrative referral payments and green energy claims, and managed to secure willing investors by talking up its credentials as a tech startup.
But Bulb’s rivals have long claimed that the company’s business model, green credentials and fundraising were all unsustainable because it relied on greenwashing, and “too good to be true” energy prices to help fuel its rapid growth.
Government officials and ministers were also taken in by Bulb’s seemingly unstoppable success, and as one senior industry source said, and “loved them” because “they came in to challenge the incumbent suppliers and grew at scale”.
“As an energy challenger, having something which fundamentally differentiates you in the market is really important. I don’t think Bulb ever did,” the source said. “They were always greenwashing. They never had a tech proposition on a par with Octopus Energy or Ovo Energy.”
The stellar growth was useful in distracting investors from its limited success in developing its own technology, the source said. But as energy prices began to rise, and investor interest began to wane, Bulb’s ready supply of financial support began to run out.
“It was always a struggle to see how this company would be viable over the long term,” the source added.