Fuse Co-founder Alan Chang: A VC suggested the company should aim for energy sector multiples rather than software multiples
Alan Chang: Fuse should be valued by energy multiples
Fuse co-founder Alan Chang stated that a VC suggested the company should aim for valuation based on energy sector multiples instead of software multiples; the key lies not in the height of the multiples, but in the scale and definition of revenue.
Software companies are typically valued based on annual recurring revenue due to low marginal costs, high gross margins, and strong scalability, leading the market to assign higher revenue multiples; mature energy companies, on the other hand, are priced more on project cash flows, EBITDA, asset value, and generation capacity.
On the surface, software multiples are generally higher: the median EV/revenue for software transactions is about 3.7x, with the upper quartile around 7.2x; the median EV/sales for the energy sector is about 2.3x.
However, if Fuse develops along the path of an energy company, its revenue base could far exceed that of software subscription revenue. Electricity retail, generation, storage, grid access, and energy trading can generate high GMV, low margins but massive cash flows, thus a lower multiple applied to a larger revenue could result in a higher enterprise value.
Energy valuations can also consider long-term power purchase agreements, grid capacity, storage assets, generation projects, and stable customer cash flows as financeable assets; software valuations rely more on growth rates, net revenue retention, customer churn rates, and long-term gross margin expectations.
In market mechanisms, the software path concentrates value on code, customer stickiness, and subscription gross margins, while the energy path focuses value on electricity demand, physical assets, long-term contracts, and financing capabilities. The former benefits from high multiple capital markets, while the latter benefits from a larger revenue denominator and debt financing leverage; the real risk is having both low-margin energy businesses and high capital expenditures without receiving a complete valuation from either type of investor.
Source: Public Information
ABAB AI Insight
Fuse's capital narrative has shifted from being a simple green electricity retailer to a vertically integrated energy platform. Founded in 2022, the company covers electricity supply, renewable energy development, storage, grid, and trading; after completing a $70 million financing in December 2025, its valuation reached $5 billion, and it plans to promote its "Energy Network" expansion in international markets.
The key to the capital path is converting high-frequency energy revenue into infrastructure financing capabilities. Software companies typically first rely on equity financing to acquire customers, then expand using cash flow; energy platforms can use project financing to build wind, solar, storage, and grid assets after accumulating customer loads and long-term contracts. The "energy multiple" mentioned by the VC actually suggests that Fuse should strive to be seen as an asset operator capable of owning and financing tangible energy assets.
Historically, Tesla has been valued as a technology and energy transition company rather than a traditional automaker, with its high valuation stemming from options in software, branding, batteries, and energy ecosystems; utility companies are usually valued based on cash flow and asset returns due to stable revenue, high capital expenditures, and strong regulation. If Fuse is merely a digital electricity retailer, it will struggle to achieve pure software pricing; if it establishes its own grid and energy assets, it will be closer to a new type of utility.
This represents a shift in pricing power. In the era of energy transition, the scarcest resource is not the interface for selling electricity, but a system that can integrate user loads, grid permissions, generation assets, storage scheduling, and financing costs. Once Fuse controls these aspects, revenue will no longer be just low-margin electricity resale, but will be able to price reliability, peak-valley price differences, and long-term capacity; the valuation logic will shift from "selling software" to "controlling energy cash flow."
ABAB News · Law of Cognition
High multiples do not equal high valuations; the denominator determines the ceiling
Software sells efficiency, energy sells irreplaceability
Those who control cash flow ultimately control valuation metrics