Catching up on UK startup news this week? From an energy giant's software spin-off to fresh funding rounds across payments, AI infrastructure and AgTech, here's what actually mattered across the UK startup ecosystem this week.
The Real Answer To How Octopus Energy Makes Money Isn't Energy
Ten years ago, Octopus Energy was a London start-up nobody had heard of and today it's the UK's largest household energy supplier, and its technology quietly runs the back office for utilities on four continents.
We went looking for a straightforward answer to how Octopus makes money. What we found instead was a company that sells electricity to fund the thing it actually believes in.
The retail side is a volume business with margins thin enough to be uncomfortable - a 0.7% profit margin on £12.4 billion of revenue in FY24 tells you most of what you need to know about selling gas and electricity directly. But underneath that thin margin, Octopus built Kraken: the cloud software that runs its own billing, tariffs and grid balancing, then started licensing it to the same rivals it competes with for customers.
By FY25, 73 million accounts were running on Kraken, only 19 million of them were Octopus's own. In December 2025, Kraken spun out as an independent company, valued at $8.65 billion - nearly two-thirds of what Octopus itself is worth as a group. The Octopus Energy Kraken valuation is one of the standout numbers in UK startup funding this week, and it's worth reading in full.
Read the full breakdown of How Octopus Energy Makes Money
Also on EP+ This Week
Beyond Octopus, this week's UK startup coverage on EP+ also spanned payments infrastructure, angel investing, travel tech and founder finance:
- How Does Checkout.com Make Money? The Payment Infrastructure Powering Global Commerce - This week's second business model breakdown, on the payments rails moving money for some of the world's biggest platforms. A useful companion piece to the Octopus story — another company that got rich building the plumbing nobody else wanted to build.
- The Woman Who Built Britain's Angel Investors Network For Female Founders - A look at the network quietly rewiring who gets access to early-stage capital in a scene that's historically shut women out of the room entirely.
- UK Travel Technology 2026: Why The Sector Is Back And Where Smart Founders Are Building - A sector everyone wrote off a few years ago, quietly rebuilding, with a clear-eyed look at where the smart money's actually going now.
- Funding Radar: UK Startups Funding This Week — Bigger Bets, Fewer Deals - Our new standalone weekly funding roundup, finally live, tracking UK startup funding this week deal by deal. This week's shape says something on its own: fewer rounds, each one larger.
- A Record Year For UK Agricultural Technology: Inside The £367M Rush Into Farming's Future - The best-funded year UK AgTech has ever had, for a sector that gets a fraction of the attention it deserves.
- UK Transfer Pricing Rules For Startups: What Founders With International Structures Must Know - Essential reading for any founder whose company has outgrown a single UK entity.
- 10 Common HR Mistakes Early-Stage UK Startups Make - The mistakes that are cheap to avoid early and expensive to unpick later.
The Wider UK Startup Ecosystem Told a Similar Story
Olix, the London chip startup building photonic AI inference hardware, raised $312 million this week at a $3.3 billion valuation - more than tripling its price in six months - with participation from Arm, Netflix co-founder Reed Hastings, and the UK government's Sovereign AI Fund.
That's the same fund that backed CuspAI two weeks ago, worth watching whose name shows up there next, and a reminder of how active UK venture capital has become around AI infrastructure specifically.
Volta, a seven-month-old London AI infrastructure startup, exited stealth entirely this week - a $2.4 billion valuation and a reported $10 billion, six-year compute deal with Anthropic, attached to a Norway data centre it's building with Bitdeer.
And a step back from any single company: fintech.global's H1 2026 data shows the UK still commands 35% of all European fintech deals, more than any other country on the continent, by a wide margin, the clearest sign yet that UK fintech funding remains the region's center of gravity.
One Pattern We Noticed
Octopus didn't set out to build a software company. It built one because running its own operations at scale forced it to solve a problem nobody else in energy had solved properly, and then it turned out other utilities wanted the fix too. Checkout.com built the same kind of thing in payments. Neither started out chasing the flashy version of their business.
You can see the same shape in Olix and Volta this week, both raising serious capital not for a product people can see, but for infrastructure other companies will quietly run on. It's the least visible part of the ecosystem right now, and possibly the most valuable.
Whether Kraken's spin-off proves that thesis, or whether it's harder to walk away from the parent company that built you than anyone admits at launch, is what we'll be watching for next.
One Number
$8.65 billion - the valuation Kraken secured when it spun out from Octopus Energy as an independent company in December 2025, a business built to solve Octopus's own back-office problem that's now worth nearly as much as Octopus itself.
Question of the Week
Which UK company do you think we're all about to be talking about?
We'd genuinely like to know, so do reply and tell us.
Sources: Octopus Energy and Kraken figures drawn from EP+'s own reporting and Octopus Energy Group's FY2024/FY2025 Annual Reports. External figures from DataCenterDynamics, Tech.eu and UKTN (Olix); EU-Startups, PYMNTS and Reuters (Volta); fintech.global (UK fintech deal share, H1 2026).
