Why the UK has become a global leader in AI

To say AI in the UK is going great guns would be an understatement. The country is home to twice as many companies providing AI products and services than any other country in Europe. And with a domestic AI market that’s tipped to grow to over $1 trillion by 2035, the UK is currently the third-biggest player in this sector, behind China and the United States.

A confluence of factors has pushed Britain to the vanguard of this industrial revolution. High among them is the fact that the infrastructure for innovation was put into place well before the phrase “generative AI” was on everybody’s lips.

Back in 2018, a UK House of Lords Select Committee report announced that “the UK is in a strong position to be among the world leaders in the development of artificial intelligence during the twenty-first century”, recommending increased investment and more visas for overseas AI specialists.

That same year, the UK government agreed a £1 billion “AI Sector Deal” to turbo charge AI firms in the country. A little while after that, the government launched its National AI Strategy, a “ten-year plan to make Britain a global AI superpower”, laying out a roadmap for the “transition to an AI-enabled economy” and the cementing of a research, development and innovation system “to meet the demands of the new economy”.

As well as forward-thinking initiatives and funding programmes, plus an active R&D ecosystem encompassing university departments and spinouts, another factor encouraging momentum is the light touch approach to regulation in the UK.

Last year, a government white paper on a “pro-innovation approach to AI regulation” demarcated this strategy, warning that “new rigid and onerous legislative requirements on businesses could hold back AI innovation” and placing responsibility for implementing safety principles on existing regulators like Ofcom and the Financial Conduct Authority, rather than any new all-encompassing body.

This strategy, which stands in stark contrast to the more rigid, centralised and sweeping approach exemplified by the EU’s AI Act, remains in place under the new Labour government, for the time being at least.

Whatever happens in the future with regards to the legislative framework, momentum in the sector will likely remain strong, with a new report by HSBC Innovation Banking and Dealroom revealing that AI-focused startups attracted nearly a quarter of all venture capital investment in the UK in 2024 so far. This equates to an impressive $2.1 billion, which is almost as much was raised in the entirety of 2023.

The report states that fundraising is “on track to reach an all-time high by year end”, with investment being funnelled into British AI firms existing within an eclectic range of distinct sectors. Here are some that have been reaping the rewards.

The standout blockbuster deal of the year so far has been the $1.05 billion windfall secured by autonomous driving startup Wayve. The largest investment in any European AI company to date, it will accelerate Wayve’s work in developing tools for vehicles to learn how to interact with their surroundings in an organic, human-like way.

The transaction was immediately hailed as emblematic of the wider UK scene, with then-prime minister Rishi Sunak saying that it “anchors the UK’s position as an AI superpower”, and Wayve’s chief executive describing it as sending “a crucial signal to the market of the strength of the UK’s AI ecosystem.”

AI’s efficacy within the compliance or “RegTech” subsector was highlighted this year by a $58 million investment in Napier AI. The company provides AI-enhanced compliance software tools for the banking and wealth management industries, allowing clients to automatically screen transactions for signs of suspicious and illegal activity.

Ever-increasing regulatory pressures within the financial sector (and many other industries) mean that there will inevitably be rising demand for AI solutions which make compliance less of a headache for companies, and we can expect to see these tailwinds leading to similarly large fundraises.

One of Britain’s leading generative AI startups, PolyAI has developed a life-life conversational platform which negates the need for human call centre/customer service staff. The platform can take calls, answer queries and conduct transactions without customers even realising they’re talking to an AI assistant, and the uncanny realism of the service has earnt major investor attention.

Earlier this year, the company raised $50 million in its latest funding round, with one backer, Vinod Khosla of Khosla Ventures, describing the UK firm as being at the forefront of a “Cambrian explosion in AI that will impact every industry”.

Haiper is one of the lesser known generative AI startups to have sprung up in recent years, which is unsurprising considering that it only emerged from stealth mode in 2024. The platform, which allows users to conjure up videos by inputting prompts, closed a $13.8 million seed round which it will use to scale the data processing and model training infrastructure it developed in stealth.

In the ambitious words of its CEO, Haiper’s “end goal is to build an AGI with full perceptual abilities” and create the most life-like imagery possible.

While there is significant trepidation around the potential consequences of generative AI for writers, artists, filmmakers, musicians and other creatives, there is a more unambiguously positive consensus around its implications for drug discovery. One company making waves is Curve Therapeutics, developer of an AI-powered intracellular screening platform which can aid in the fight against cancer and other diseases.

In one of the big UK healthtech deals of the year so far, Curve secured more than $52 million which it will use to expand its team and enhance its platform.

Here at Hampleton Partners, our team is made up of experienced advisors in the sectors being transformed by AI, including healthtech and autotech. If you’re a senior decision maker in a company that could benefit from the current market tailwinds, say hello to Heiko Garrelfs, one of Hampleton’s Sector Principals with AI expertise.