What Happened: Government Investment in Kraken Technologies
1. £25 million stake through the British Business Bank (BBB)
The UK government, via the state-owned British Business Bank, has agreed to invest £25 million in Kraken Technologies, marking the bank’s largest direct investment in a private company to date. (Inspenet)
2. Who Kraken Technologies Is
Kraken is a London-based AI-driven software platform spun out from Octopus Energy that helps utilities manage operations, customer billing and smart services. It serves millions of utility accounts worldwide and was valued at around $8–8.65 billion in its latest funding round. (Wikipedia)
3. Strategic Goals for the Investment
The government says the funding aims to:
- Encourage Kraken to grow and scale in the UK, especially as a tech innovator. (Tech.eu)
- Support a potential IPO on the London Stock Exchange in the medium term rather than abroad. (Financial Times)
- Signal that the UK wants to retain and attract high-growth tech businesses rather than losing them to foreign markets. (Malay Mail)
4. Broader Context: BBB Strategy Shift
This move follows reforms to the British Business Bank’s mandate, giving it greater capacity to make larger, riskier direct investments in scale-ups and deep-tech sectors alongside financing smaller UK businesses. (British Business Bank)
Why This Is Sparking Debate
Supporters Say:
Boosts UK tech and innovation
- The investment signals the government’s ambition to champion high-growth companies and build home-grown tech success stories. (The Guardian)
Helps keep flotelisting in London
- By backing Kraken, the UK is trying to make London more attractive for its IPO rather than losing out to markets like New York. (Financial Times)
Part of proactive industrial strategy
- Ministers frame it as deliberate “picking winners” to drive growth, jobs and global competitiveness in areas like AI and software. (The Guardian)
Critics Raise Concerns:
Mission creep for the British Business Bank
- Historically, the BBB focused on supporting small and medium businesses struggling to access finance. Some analysts argue Kraken doesn’t fit that profile, having already raised large private capital and posted strong recurring revenue. (The Guardian)
Small stake may not influence Kraken’s decisions
- The £25 million stake is very small relative to Kraken’s valuation, so skeptics wonder whether it will meaningfully persuade the firm to list in London. (The Guardian)
Transparency and priority questions
- There are calls for clearer criteria on why this type of investment aligns with BBB’s core mission versus other support channels like venture funds or tax incentives. (The Guardian)
Big Picture: UK’s Industrial Strategy
This investment by the BBB is part of a broader shift in UK economic policy toward:
- Direct support for domestic tech champions
- Increased funding for deep tech, life sciences, AI and scale-ups
- Reforms to regulation and competition to stimulate growth
The British Business Bank’s investment strategy is being recalibrated to include higher-risk, potentially high-reward bets rather than just traditional small business loans and guarantees. (British Business Bank)
What Comes Next
Kraken’s future path now includes:
- Potential IPO listing by 2027-28 (location still undecided). (Financial Times)
- Continued global expansion of its AI utility software.
- Debates over UK tech policy and how public funds should be used.
- Here’s a detailed, case-study–style breakdown of the UK government’s investment in Kraken Technologies and the debate it has sparked over the British Business Bank’s strategy, including real comments, analysis, and expert perspectives from recent coverage.
Background: The Government’s Kraken Investment
In January 2026, the UK government, through the British Business Bank (BBB), agreed to invest £25 million in Kraken Technologies — a software business spun out from Octopus Energy — marking the Bank’s largest direct investment to date as part of efforts to support scale-ups and tech innovators. (Financial Times)
The aim, according to officials, is to:
- Encourage Kraken to scale up in the UK
- Boost the chances of a future IPO on the London Stock Exchange
- Signal that the UK wants to retain high-growth companies domestically rather than see them list abroad (e.g., in New York) (Financial Times)
At the same time, the BBB’s overall investment capacity was expanded to £25.6 billion, allowing it to take on bigger, higher-risk equity stakes than in the past. (British Business Bank)
Case Study 1: Government Strategy — Activist Investment
What happened:
Business Secretary Peter Kyle publicly defended the investment as part of a new “activist” industrial strategy — saying the UK should ’pick winners’ to spur economic growth and job creation. (The Guardian)Key points from the case:
- Kraken serves millions of energy customers worldwide with AI-driven utility software.
- The government sees this stake as a way to anchor a high-growth business in the UK.
- Officials view the investment not just as financing, but as a signal to other tech firms that the UK wants to be a destination for scale-ups and IPOs. (The Guardian)
This approach marks a shift from the BBB’s traditional role — which focused on helping smaller firms with financing gaps — to backing larger, established tech companies. (British Business Bank)
Case Study 2: Debate Over Mission Creep — Critical Commentary
The investment has also triggered criticism — especially from financial commentators and analysts.
Critique:
An opinion column argued that Kraken doesn’t need public money — it already had strong private backing and significant recurring revenue — so the BBB’s involvement represents “mission creep” away from its core purpose of supporting smaller businesses struggling to access finance. (The Guardian)Specific criticisms include:
- The £25 million stake amounts to a tiny minority (around 0.35 %) of Kraken’s valuation, so it may do little to influence strategic decisions like where to list. (The Guardian)
- Kraken is far from a typical BBB target — it’s a large scale-up with global revenue and major international investors. (The Guardian)
- Critics call for greater transparency about how BBB investment decisions now align with its mission and taxpayer interests. (The Guardian)
Public and Community Sentiment
Supportive viewpoints:
- Some commentators (e.g., on social platforms) see this as a positive investment into UK tech, noting that government backing can help encourage domestic innovation and maintain the UK’s competitive edge. (Reddit)
More skeptical takes:
- Others argue that a £25 million stake in a multi-billion-pound company is more symbolic than strategic — that if Kraken is a “sure thing,” it would attract capital anyway. (Reddit)
These crowd voices reflect broader public conversation about whether government should actively intervene in private markets or support through broader ecosystem incentives instead.
What This Means for the British Business Bank
Strategic Shift
The BBB’s investment in Kraken illustrates a major strategic evolution:
- From financing credit gaps for small businesses
- To participating in equity financing of scale-ups and deep tech as part of a modern industrial policy (British Business Bank)
Broader Support for Innovation
Alongside Kraken, the BBB has committed funds to life sciences and deep-tech venture capital, positioning itself as a catalyst for innovation funding rather than just a lender. (British Business Bank)
Expert/Stakeholder Commentary
Business Secretary (pro-investment):
“We are placing big bets on the industries where Britain can win,” aiming to back innovators with real firepower and reduce red tape. (Malay Mail)Financial critic (skeptical):
Observers argue that the BBB’s mandate is being stretched beyond its original mission of supporting smaller businesses and that such high-profile investments require clearer justification. (The Guardian)
Summary: What the Debate Is Really About
Pro-Investment View Critical View Helps retain globally competitive UK tech firms Moves away from BBB’s core mission Signals London as a listing destination Small stake may not influence company decisions Can attract private investment and talent Raises transparency and prioritization concerns