Published: July 23, 2026
The £500mn Sovereign AI fund will be used to help early-stage British companies scale. Can it help the UK curb its dependency on overseas technologies?
In April, the UK government launched a £500mn fund called Sovereign AI. The fund, which will invest in promising British AI startups, bills itself as being ‘like a venture capital fund but with the muscle of the state behind it’. That means it will work faster than a typical state-backed programme – cutting the red tape that so often stymies progress – and can offer capacities a typical VC fund cannot.
To date, the fund has invested in three startups, offering them undisclosed sums of capital as part of their latest funding rounds. The fund has said that, while it does not comment on specific investment figures, typical equity investments will be worth around £1-£10m.
It has also entered ‘compute agreements’ with six others. Specifically, they get access to the UK’s largest AI supercomputers, as well as free visas for international talent, and hands-on government support.
As Michael Gaffney, a spokesperson for Sovereign AI, tells EMEA Finance, AI firms need vast amounts of specialist hardware to train their models, which can be a serious bottleneck in their ability to grow. “We are tackling this hurdle head-on by putting some of the nation’s foremost supercomputer capacity – the AI Research Resource (AIRR) - behind the companies that that Sovereign AI supports,” he says.
Scaling domestically, competing globally
The rationale behind the fund is simple. The UK wants to gain a competitive edge in the global AI race, becoming what Prime Minister Keir Starmer calls an “AI maker, not an AI taker”. In other words, the government hopes to develop its domestic capacity, curbing its reliance on foreign technology and spurring economic growth.
Already, the United Kingdom is one of the largest AI markets in the world, ranked third on some indices. British AI companies contribute £11.8bn a year to the economy, with a record £2.9bn invested in these companies in 2024. And there have been some notable success stories, such as London-based Google DeepMind, one of the top AI research laboratories in the world that emerged from Google’s 2014 purchase of DeepMind co-founded by British Nobel Prize winner Sir Demis Hassabis.
However, it risks ceding ground to rivals. Despite its strong research capacity and talent base, it fares poorly at scaling up companies and retaining talent. Currently, fewer than half of Britain’s top AI academics stay in the UK, while many British founders leave for the US as soon as their company reaches a certain size. Sovereign AI hopes to help British AI companies scale domestically and compete globally.
“We can’t guarantee that every single business Sovereign AI supports will be a success. But we can be confident overall, because we know what a huge economic impact AI is set to have,” says Gaffney. “The AI sector grew 23 times faster than the economy as a whole last year, and broader AI adoption across the economy could add £55-£140 billion to UK GVA. When the opportunities are this big, backing the UK’s AI innovators will reap rewards overall.”
The fund has some credentialed people at its helm. James Wise, the chair, is partner at the VC firm Balderton Capital. Joséphine Kant, head of ventures, previously worked at Google, Dogwood Ventures, and Y Combinator – the latter being an accelerator programme with deep links to Open AI. The managing partner is Suzanne Ashman, a venture capitalist who also happens to be the daughter-in-law of Tony Blair.
“We understand that to deliver on our promise to the AI sector, we have to look and feel more like the market we are engaging with,” says Gaffney. “That is why Sovereign AI investments are made by a team of professional investors, equipped with the tools and mechanisms to operate at the speed of venture.”
The earliest investments
The Fund focuses specifically on early and growth-stage companies that are deemed strategically important for the UK. Through investing at an early stage, generally in partnership with private co-investors, it believes it can have an outsized impact on each company’s trajectory.
Key focus areas include AI for the design of novel computer chips; next-gen AI Labs; AI in health and life sciences; AI for science; and AI for trust, integrity and assurance (e.g., making sure AI behaves as reliably as expected). It will also work with the National Security Strategic Investment Fund to support AI firms working on defence and national security.
“These are areas in which the UK already has the ingredients needed to be a world leader, and they are also areas that will be increasingly important to the UK’s economic and national security,” says Gaffney.
The first company to receive investment was the Cambridge University spinout Callosum, which is developing a new class of AI infrastructure. This was swiftly followed by Ineffable Intelligence, which is building algorithms that can learn for themselves through interacting with their environments, rather than simply being trained on data sets. Notably, this company is led by David Silver, a researcher who is regarded as one of the most influential figures in modern AI.
The third company to receive funding was Isomorphic Labs, which uses frontier AI for drug design and development and was also founded by Hassibis.
The startups to have received ‘compute’ (i.e. access to the UK’s supercomputer network), are Prima Mente, Cosine, Cursive, Doubleword, Twig Bio and Odyssey. These companies use AI for various purposes, ranging from decoding DNA sequences to heightening national security. Sovereign AI says it is also in talks with around 30 other firms over potential access to the network, but has not disclosed how many companies are likely to receive funding or compute in future.
“Investment decisions are based on a structured assessment of technical merit, commercial potential, and strategic relevance to UK priorities,” says Gaffney. “We will be led by that process, so it would be wrong to put a target figure on the Fund for number of companies supported.
Since Sovereign AI was launched, it has embarked on a tour of UK cities to ensure that people across the country feel the notional benefits of AI. It has also started working with the government’s Global Talent Taskforce in a bid to attract leading AI researchers. As AI becomes an ever-more dominant force in our society, the government is convinced that its’ half-billion-pound gamble will pay off.
“We want Sovereign AI to create a return for the Exchequer, and it will,” says Gaffney. “But we’re also here to take risks and back Britain’s best AI-founders to create jobs and economic growth throughout the UK.”