TL;DR: Kraken's Spin-Out and Its Lessons for Entrepreneurs
Kraken, Octopus Energy's AI-powered utility platform, has become an independent company, valued at €7.3 billion after an €850 million funding round. This move highlights the transformative potential of AI in outdated industries and the strategic advantage of spin-outs for scalability and focus.
• Kraken uses AI to revolutionize global utility management, already serving 70+ million accounts and top energy clients like EDF and E.ON.
• Independence allows Kraken to attract neutral partnerships and focus solely on growth without parent company limitations.
• The funding success shows the power of mission-driven projects and investor alignment with global problem-solving goals.
Entrepreneurs should rethink scalability, evaluate spin-out opportunities, and focus on solving large-scale inefficiencies. Ask yourself: is your business model future-proof and impactful enough?
Octopus Energy’s decision to spin out its AI-driven utility platform, Kraken, is creating waves in the business world. Valued at an impressive €7.3 billion after an €850 million funding round, Kraken’s formal independence is a milestone that exemplifies the growing power of AI software in transforming global industries. As someone who has spent over two decades building multidisciplinary ventures mixing technology, education, and social responsibility, I immediately recognized this as more than just another funding announcement, it’s a wake-up call for entrepreneurs to rethink scalability and independence in business models.
What is Kraken, and Why Should Entrepreneurs Pay Attention?
Kraken isn’t your average tech platform. It’s an end-to-end AI utility management system designed to optimize energy operations, reduce inefficiencies, and bring utility management into the modern era. Originally developed within Octopus Energy, Kraken is now independent, boasting clients like EDF Energy, E.ON, Tokyo Gas, and National Grid. With contracted revenues already exceeding €424.5 million annually, the platform has proven its ability to scale. Entrepreneurs, take note: Kraken’s success isn’t just about its AI technology; it’s about its adaptability to serve global energy needs while remaining user-centric.
- Operates across global hubs in London, New York, Tokyo, Paris, and Melbourne
- Serves over 70 million accounts worldwide
- Appeals to massive institutional investors like Fidelity International and Ontario Teachers’ Pension Plan
The take-home for founders? Building solutions that address critical, large-scale inefficiencies can position your business at the forefront of innovation while securing strong investor backing. Think less about the shiniest tech and more about addressing foundational challenges in outdated industries.
Why Spin-Outs Can Be a Genius Business Move
Kraken’s separation from Octopus Energy isn’t just a structural change, it’s a strategic blueprint for founders. By spinning out Kraken, Octopus Energy stripped away potential conflicts and allowed Kraken to grow as a neutral, AI-powered global solution for utilities. Greg Jackson, founder of Octopus Energy, captured this succinctly, stating that independence gives Kraken the “focus and freedom” it needs to scale beyond its historical parentage.
There’s a lesson here: sometimes, the best way to scale your innovation is through separation, creating room for new investment opportunities and focus. Some scenarios where spin-outs might shine include:
- When your product/service has traction but serves markets your core business cannot fully capture
- When neutrality improves your ability to partner with competitors or industry-wide clients
- If your subsidiary could benefit from focused investments or governance tailored solely to its growth
- If a spin-out inspires new leadership and clarity in strategic direction
Entrepreneurs should evaluate early on whether their business focus or structure is hindering growth opportunities. It’s daunting to consider splitting assets apart, but sometimes it’s what unleashes exponential success.
How Investors Are Redefining “Smart Money”
Kraken’s €850 million round wasn’t funded by small players. Investors like D1 Capital and Fidelity International are renowned for backing high-potential, vision-driven entrepreneurs. What does this tell startup founders? Capital alone doesn’t drive success; strategic support from aligned investors can unlock entirely new opportunities.
For startups seeking funding, consider:
- Find investors with sector expertise: Kraken’s funding round included energy-specialized players like Ontario Teachers’ Pension Plan, which aligns fully with Kraken’s mission.
- Look for alignment over valuation: Investors backing Kraken likely saw long-term value in modernizing global utilities, not just financial returns.
- Use capital to expand reach and capabilities: Kraken’s global aspirations, from New York to Tokyo, are possible because it freed itself from a UK-only identity.
Investors aren’t just looking to multiply their money. Many want to actively support solutions for global challenges. For founders, articulating your company’s broader mission, not just financial potential, could attract smarter, values-aligned investments.
What Entrepreneurs Can Learn from Kraken
What struck me most about Kraken’s story was its strong foundation in solving real-world problems and its deliberate expansion path. Entrepreneurs often get stuck emulating trendy models without doing the strategic thinking that Kraken’s story underscores.
- Be mission-focused: Building products like an AI-powered utility platform starts with identifying inefficiencies in major systems.
- Think globally but stay practical: Kraken expanded globally without losing focus on consistent, scalable deliverables.
- Stay open to partnerships: Kraken collaborates with utilities and energy providers rather than replacing them, demonstrating how cooperation often beats competition.
Ultimately, founders should look beyond immediate trends, funding hype, or shortcuts. Focus on building solutions with long-term, adaptable impact. Kraken’s ability to evolve while staying true to its origins is an inspiring testament to this idea.
Final Thought: Is Your Startup Thinking Big Enough?
Kraken’s €7.3 billion valuation wasn’t built overnight, it was the result of years of strategic execution, focused leadership, and mission-driven expansion. The biggest lesson here? As founders, we need to consistently think beyond initial goals and explore whether the structures we create support outsized impact. Whether it’s scaling globally, aligning with the right investors, or entertaining structural independence, the Kraken spin-out challenges us to think better, build smarter, and aim higher.
If you’re looking to implement these lessons in your business, start by asking yourself: “Is my current business model future-proof, scalable, and impactful enough?” The future belongs to those willing to adapt, rethink, and take bold leaps, just like Kraken did.
FAQ on Octopus Energy’s Spin-Out of Kraken
What is Kraken and how does it impact the energy sector?
Kraken is a state-of-the-art AI-driven utility platform designed to modernize energy management systems worldwide. It helps optimize energy operations, reduces inefficiencies, and enables large-scale scalability for utility providers. Serving over 70 million accounts globally, Kraken partners with major companies such as EDF Energy, E.ON Next, Tokyo Gas, and National Grid. Its innovative approach is revolutionizing outdated energy systems by offering an adaptable, end-to-end AI utility management solution focused on reducing costs and improving efficiency. Learn more about Kraken’s capabilities
Why did Octopus Energy choose to spin out Kraken?
Octopus Energy made the strategic move to spin out Kraken to operate as an independent entity. This independence allows Kraken to avoid potential conflicts of interest, maintain neutrality, and scale globally. Free from its parent company, it can attract investors, align with its ambitious goals, and focus on becoming a universal AI solution for utilities worldwide. The spin-out is a key example of how separating business units can create exponential growth opportunities. Discover the benefits of Kraken’s independence
What is Kraken’s valuation, and who invested in it?
Kraken is valued at €7.3 billion ($8.65 billion) following a €850M funding round. High-profile investors, including D1 Capital Partners, Fidelity International, and Ontario Teachers’ Pension Plan, led the financing. These investors marked their commitment to the platform due to its transformative vision for the global energy industry and its scalable AI-driven solution for modernizing utilities. Explore details about Kraken’s investment round
Which utilities are using Kraken’s technology?
Kraken’s AI-powered platform serves a global roster of utility companies, including EDF Energy, E.ON Next, Octopus Energy, Tokyo Gas, and National Grid. It supports over 70 million customer accounts by automating workflows, optimizing energy distribution, and improving customer service. These partnerships prove Kraken’s adaptability across markets and its capacity to address large-scale inefficiencies. Learn more about Kraken’s clients
How does Kraken contribute to energy efficiency?
Kraken automates processes like billing, customer service, and energy grid monitoring, enabling utilities to reduce inefficiencies and improve distribution models. Its AI technology integrates renewables and adapts to energy demands in real-time, supporting sustainability goals while reducing operational costs. The platform's ability to streamline energy management for millions of accounts showcases its role in future-proofing the energy sector. Discover Kraken’s energy solutions
How will Kraken’s spin-out affect Octopus Energy?
After the spin-out, Octopus Energy retains a 13.7% stake in Kraken, reflecting its continuing relationship while allowing Kraken full independence. Octopus Energy can now focus on its innovation pipeline, such as EV leasing and solar energy technologies. The separation highlights how strategic spin-outs can provide shared benefits without compromising the growth potential of either entity. Understand Octopus Energy's role in the spin-out
What lessons can entrepreneurs learn from Kraken’s spin-out?
Kraken's story shows the value of addressing significant market inefficiencies with scalable solutions. Entrepreneurs should consider whether separating innovative products from parent companies can open new growth opportunities. Independence allows platforms like Kraken to focus and scale globally, attracting smart investments and partnerships. Explore entrepreneurial insights from Kraken’s strategy
What makes Kraken an attractive investment opportunity?
Kraken has captured investor interest due to its transformative impact on the global energy industry. Investors, such as Fidelity International and D1 Capital Partners, recognize its ability to address significant inefficiencies while aligning with modern energy demands. Its scalable, AI-driven technology positions it as a valuable partner for utilities aiming to modernize operations efficiently. Learn why Kraken attracts global investors
Why is AI key to Kraken’s success?
AI enables Kraken to automate complex utility processes, including customer account management and energy distribution. By incorporating sophisticated algorithms and real-time analytics, Kraken reduces operational costs while increasing efficiency. Entrepreneurs and industry leaders should focus on integrating AI into outdated systems to harness its potential for creating scalable innovations.
Will Kraken expand further after its spin-out?
Yes, Kraken plans to accelerate its global growth and positively impact a billion lives within the next decade. With offices in London, New York, Tokyo, Paris, and Melbourne, Kraken is set to strengthen partnerships with energy providers worldwide while deepening their focus on modernizing utility systems using AI. Discover Kraken’s ambitious global plans
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.