TL;DR: Octopus Energy Spinning Off Kraken Highlights Major Startup Growth Potential
Octopus Energy spun off its AI-powered platform, Kraken Technologies, in a historic $1 billion funding round, valuing Kraken at $8.65 billion. Originally developed as an internal energy tool, Kraken now manages 70 million accounts globally and is expanding into water utilities and telecoms.
• Scalable utility tech: Kraken integrates solar, batteries, and EVs with real-time grid optimization.
• Revenue powerhouse: Already generating €424.5 million annually in contracted revenue.
• Entrepreneur insights: Modular, licensable tech can become standalone billion-dollar opportunities.
Entrepreneurs can learn from Kraken's breakout success by building scalable solutions with cross-industry appeal. Ready to amplify your business like Kraken? Start by designing systems with spinoff potential.
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Octopus Energy Spins Off Kraken: What $1 Billion Means for the Future of Utility Tech
Sometimes in business, the vision behind a startup grows so large it can no longer sit inside its original box. This is exactly what happened with Kraken Technologies, the artificial intelligence platform initially developed as Octopus Energy’s internal tool. In a groundbreaking move, Kraken has been spun off with $1 billion raised in its first external funding round, valuing the new standalone business at an eye-popping $8.65 billion. As an entrepreneur, this kind of strategic evolution should make you very curious: how can you build a business that generates secondary billion-dollar opportunities? Let’s dive in.
What Exactly Is Kraken?
Kraken Technologies wasn’t just another energy solution. Originally, it was created to solve Octopus Energy’s operational inefficiencies, managing customer accounts, billing, and real-time grid flexibility. Fast-forward a few years, this software now supports over 70 million utility accounts globally. Whether you’re in Tokyo managing distributed energy resources or a UK homeowner with a predictive tariff, Kraken does the heavy lifting. But here’s the kicker: this platform doesn’t just work for energy companies. It’s already scaling to water utilities and even telecoms.
For years, I’ve studied the lifecycle of technology businesses, and Kraken embodies what I call the “quiet disruptor” stage. It sneaks in as a business tool but explodes into a revenue powerhouse when adapted by competitors or adjacent industries. The utility space, notoriously slow, is ripe for this kind of disruption.
How Did Kraken Justify an $8.65 Billion Valuation?
This is not just about technology buzzwords like “AI” and “automation” slapped on a pitch deck. Here’s why the valuation makes sense:
- Global Reach: Managing 70 million customer accounts is no small feat. The platform already spans multiple regions with marquee clients like EDF Energy and National Grid in the US.
- Proven Revenue: In its most recent disclosure, Kraken showed €424.5 million in annual contracted revenue. This isn’t future hope, it’s current performance.
- Platform Capability: Its ability to integrate solar, battery, and EV charging with real-time optimization puts it leagues ahead of rivals.
- Growth Opportunity: Emerging markets like water utilities and telecoms provide virtually untouched industry segments waiting for software modernization.
What lessons should we take? Sometimes, businesses need to be split to soar. This valuation positions Kraken to scale independently with no pressure to “serve the mothership.”
What Entrepreneurs Can Learn from This Deal
The separation of Kraken offers critical insights for founders looking to maximize business value:
- Modular Thinking: When you build your startup, ask yourself: which pieces could become standalone products someday?
- Secondary Monetization: Create technology that others will license. Kraken generated $500 million annually through its licensing deals alone.
- Investor Mix: Kraken’s $1 billion funding pool included powerhouses like D1 Capital Partners, Fidelity International, and Ontario Teachers’ Pension Plan Board. Choosing investors with long-term alignment matters.
And remember, your business can expand far beyond its original form. This is about focusing on your core mission but keeping your eyes open for the billion-dollar opportunities waiting within your existing ecosystem.
Will Kraken’s Independence Change the Game?
The short answer is: absolutely. By separating from Octopus Energy, Kraken can operate as a “neutral” technology provider. This means energy competitors can adopt Kraken without feeling like they’re funding a rival. Imagine Tesla licensing its battery tech to Ford or Toyota, it’s that level of market openness and expansion potential.
As for Octopus Energy, they retain a 13.7% stake, keeping their foot in the door while focusing on their core mission. This looks like a best-of-both-worlds strategy.
How Should Founders Implement These Lessons?
If you’re building a startup, here’s how you can bake in Kraken-like potential:
- Develop Systems Thinking: Look beyond “solving the problem” to creating entire systems that others can use.
- Think Licensing Early: Software-as-a-Service is lucrative, but Software-as-a-Platform subscriptions can snowball.
- Keep Tech Ownership Clean: Build your IP portfolio with an eye on future spinoffs. Investors love a clear intellectual property narrative.
- Independence as Strength: A piece of your business may need freedom to thrive fully.
Closing Thoughts: Big Visions Need Bigger Moves
Kraken’s spinoff into independent territory is a power move that encapsulates everything exciting about cross-industry SaaS platforms. It’s proof that an internal tool can evolve into a global juggernaut when nurtured correctly. As an entrepreneur, the challenge is asking yourself early on: “What am I building that could outgrow me? And is my startup structured to support that growth?” Believe me, playing small while dreaming big no longer works. Start thinking about secondary billion-dollar opportunities, because they’re not as rare as you think.
Ready to take your startup to the next level? Start by studying examples like Kraken’s, and adapting their strategies into your own business playbook.
FAQ on Octopus Energy's Kraken Spin-off and Its Impact
What is Kraken’s role in the utility industry?
Kraken is a cutting-edge technology platform initially developed as an in-house solution by Octopus Energy. Its primary role has been to streamline utility management by automating customer account services, billing, and real-time grid flexibility. Over time, Kraken has expanded its functionality, growing to manage over 70 million utility accounts globally. The platform supports everything from distributed energy resource integration, like solar panels, EV charging, and battery storage, to predictive tariffs that improve energy efficiency. As Kraken evolves into an independent entity, it has begun to scale into other utility sectors such as water and even telecom. This broad applicability positions Kraken as a transformative force in modernizing slow-moving utility industries. Learn more about Kraken Technologies.
How does the $8.65 billion valuation of Kraken make sense?
Kraken’s $8.65 billion valuation is underpinned by several solid metrics. First, the platform already manages over 70 million global utility accounts, showcasing its scalability. Second, Kraken has proven revenue streams; it disclosed €424.5 million in contracted annual income, demonstrating that its business model generates significant and consistent earnings. Furthermore, its ability to integrate technologies like solar, electric vehicles, and batteries positions it at the forefront of grid innovation. The expansion into other industries like water utilities and telecom unlocks additional sectors ripe for modern software solutions, boosting growth potential significantly. Discover more about Kraken’s valuation and business model.
Why was it important for Octopus Energy to spin off Kraken?
The spin-off allows Kraken to operate as an independent entity, free from the constraints of serving only Octopus Energy. This independence makes Kraken a neutral technology provider, enabling competitors of Octopus Energy to adopt its platform without funding a rival business. By separating, Kraken can attract a diverse group of clients across utilities, telecoms, and water management. For Octopus Energy, maintaining a 13.7% stake in Kraken ensures they still benefit financially while enabling Kraken to scale faster with its dedicated team, governance, and operational focus. Learn how business separation enhances scalability.
What industries can benefit from Kraken’s technology besides energy?
While Kraken is primarily known for its contributions to the energy sector, the software’s modular design allows it to adapt to various utility industries. Water utilities are an emerging focus area, where Kraken aims to modernize fragmented billing and resource management systems. Similarly, telecom companies can leverage Kraken’s customer account automation and predictive service offerings to enhance their operational efficiency. As these sectors face pressures to modernize and meet customer demands, Kraken’s AI-powered platform presents an attractive solution. Read about new sectors embracing Kraken’s utility platform.
How has Kraken expanded globally?
Initially launched in the UK, Kraken now operates on a global scale, managing utility accounts across regions like the United States, Europe, and Asia-Pacific. Key clients include EDF Energy in Europe, National Grid in the U.S., and Tokyo Gas in Japan. Kraken also recently expanded into Australia, signaling stronger ambitions to grow in international markets. Regional offices in cities such as New York, Paris, Tokyo, and Melbourne strengthen its operational reach, allowing it to form partnerships worldwide. This global presence has been instrumental in building its client base and generating significant revenue streams. Explore Kraken’s global growth strategy.
What lessons can entrepreneurs learn from Kraken’s spin-off?
Kraken’s journey teaches entrepreneurs the importance of modular design and secondary monetization opportunities. By building a platform with licensing potential, Octopus Energy monetized its internal technology as a standalone business, generating $500 million annually from licensing alone. Additionally, securing investors with long-term alignment, like Ontario Teachers’ Pension Plan and Fidelity International, illustrates the power of finding backers supportive of visionary goals. Founders should also consider intellectual property clarity and explore splitting off business units when independence can unlock significant growth potential. Discover entrepreneurial lessons from Kraken.
What makes Kraken an industry disruptor?
Kraken is often described as a “quiet disruptor.” Unlike flashy consumer-facing technologies, Kraken operates behind the scenes as a reliable operating system for utilities. Its ability to automate up to 40% of customer interactions, optimize distributed energy resources like EVs and solar panels in real time, and streamline billing processes has transformed utility operations. Additionally, its neutrality following the spin-off makes it a disruptor for an industry resistant to external solutions. This approach offers a blueprint for disruption in traditionally slow-adopting sectors. Check out Kraken’s disruptive impact.
Will Kraken go public in the future?
While Kraken’s recent $1 billion funding round was its first external one, the company’s long-term plans could include an eventual IPO. Investors such as D1 Capital Partners and Fidelity International see Kraken as a potential global leader in utility technology, hinting at eventual public listing ambitions. With an $8.65 billion valuation and increasing revenues, Kraken may be laying the groundwork for an IPO to further accelerate its expansion and innovation efforts. Read about Kraken’s IPO potential.
How does Kraken create value for its customers?
Kraken helps utility providers enhance operational efficiency and customer engagement. By automating up to 40% of digital customer inquiries and incorporating tools for predictive energy billing and real-time grid optimization, Kraken reduces costs and complexity for its partners. Its adaptability to new technologies like distributed energy resources (batteries, EVs, solar) ensures it remains innovative. The platform’s modular nature offers custom solutions, creating a better customer experience for end-users and better business performance for companies. Explore Kraken’s customer-centric value creation.
What is the impact of Kraken becoming a neutral tech provider?
As a neutral technology provider, Kraken can partner with utility companies that previously viewed it as a rival’s property. This shift opens a broader customer base, including competing energy providers, allowing for faster adoption of its platform across the sector. The move also instills trust across industries like water utilities and communications, proving that neutrality facilitates collaboration. By becoming independent, Kraken ensures its growth isn’t limited to Octopus Energy’s success, creating an open-market solution with far-reaching impacts. Learn how neutrality impacts adoption.
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the “gamepreneurship” methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the point of view of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
