You need scale to play in the energy industry. Nigel Evans and Steve Smith, directors of auto-switching service Flipper, think the company will be able to step up to hundreds of thousands – or even millions – of customers now it has been acquired by Wessex Water. They spoke to Janet Wood

Domestic auto-switching service Flipper spent nine days in administration in June. It has emerged with a new backer – Wessex Water – that has both domestic contact and global reach.

Flipper directors Nigel Evans and Steve Smith admit that it “wasn’t the smart way” to go about getting the backing that would have inevitably been required”. Evans and Smith say they “always knew that we were going to need to get serious financing for the business and had spent a significant amount of time talking to various people who might be able to do that – by and large it wasn’t successful”. Potential investors wanted a very quick return and found it hard to understand Flipper’s model, in which the company takes no commission, and instead takes an annual fee from its members.

Smith says: “We were trying to get customers at an acquisition cost that makes sense. Traditional comparison websites are getting £40-£60 commission. We want to find a smarter and cheaper way of doing that. At the moment it looks like an arms race – they spend more and more [advertising] but they are fighting over the same customers or they are only growing the base incrementally.”

Wessex has ambitions to provide “concierge” home services, but “don’t expect anything in mortgages or telecoms within the next few months – that isn’t going to happen,” says Evans. More importantly, he adds: “We really need to make an impact in energy. We have established a significant footprint, a lot of people know about us, but that is no substitute for very large numbers of customers. I don’t mean 20,000 or 30,000. I mean if we are going to have any impact we have to have ambitions that go above 100,000 in a year and rapidly into the millions.”

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Further reading: New Power speculates: Who are the energy consumers of 2030?