Kraken has been one of the more visible UK defence tech startups to make waves around the world with its distinctive uncrewed surface vessels, and now the company is capitalising on that activity with a large fundraise. Today Kraken confirmed that it has raised $175 million, a Series B values the company at $1 billion, making it the latest “unicorn” to come out of the UK.
The funding, led by DTCP, will be used both to continue developing more technology and payload capabilities for its vessels, and to set up more localised manufacturing facilities in geographies where it is active globally.
Kraken’s Series B is coming at a dicey time for defence technology in the UK. Just as NATO is asking for member nations to up their commitment to building up their own defences in the face of geopolitical turmoil, the country’s Ministry of Defence last week announced its latest investment plan, which came in $15 billion for the next four years, around half of what it had said previously would be needed to expand and modernise the UK’s defences. That has raised questions around who and what would win or lose as a result of that shortfall.
On top of that, air-based drones have largely dominated defence tech interest and funding, and that presents the possibility for two different scenarios. Those building for other domains might be more challenged to open investor and customer doors. But alternatively, those that are strong will see a lot of interest from investors and buyers simply because the market for options is far less overcrowded.
Today’s fundraise is a signal that UK companies themselves are finding ways to diversify — and yes, to be more resilient — to offset any potential knock to their own trajectories.
We’ve covered a number of Kraken’s milestones, which have included a partnership with Anduril to fast-track Kraken’s USVs into the US Navy, a separate USSOCOM deal, adding former US Secretary of State and ex-CIA director Mike Pompeo to its board, adding Erica Dill-Russell as a chief commercial officer, fast-track deals for procurement in the UK, a JV with prime NVL, and more. The company said that it is supporting troops in “multiple ongoing conflicts.” It doesn’t specify which, but the wars in the Middle East and Iran both have significant naval components.
Notably, Kraken’s manufacturing roadmap will not be plotted out entirely on Kraken’s own steam. Kraken already has set up in partnerships outside of the UK to produce its current range, which include the K3 SCOUT, K5 KRAKEN, and K7 SABRE uncrewed surface vessels, and the K4 MANTA that can operate both on the surface of and underwater.
These are with Rheinmetall in Germany, with Anduril Industries in the United States and with Inocea in Canada and can currently produce up to 1,000 vessels per month. Kraken said it will be announcing more of these manufacturing partnerships elsewhere very soon.
The fundraise here has an interesting mix of both British and European backers, including some strategic prime defence contractors.
In addition to DTCP leading the round, other participants included the British Business Bank, NATO Innovation Fund (NIF), Rheinmetall, Inocea Group, HICO, Thesiger Capital Group, BOKA Capital, Supernova Invest and Hakluyt Capital. Kraken also noted that as part of the round, pre-existing investors NIF, the UK’s National Security Strategic Investment Fund (NSSIF), SmartCap, Notion Capital and Speedinvest had put in convertible notes previously and those have now converted to equity, generally a signal of confidence in the portfolio company’s growth and returns.
