The British government launched a venture capital fund to invest in the domestic market AI startupsas part of an attempt to minimize the country’s dependence on foreign-made technology.
The fund, Sovereign AI, will invest approximately $675 million in local projects. startups in areas ranging from model development to agentic AI to drug discovery. Additionally, portfolio startups will have access to the UK fleet of supercomputersfree visas for international hires, procurement opportunities and specialist advice within government.
Sovereign AI will be led by James Wise, a partner at venture capital firm Balterdon Capital, and Josephine Kant, formerly of Dogwood Ventures and Y Combinator, a accelerator program whose financing contributed to the creation of OpenAI.
On Thursday, the fund announced an investment in Callosum, a startup developing software that helps different classes of processors work efficiently alongside each other. The fund awarded six other startups (Prima Mente, Cosine, Cursive, Doubleword, Twig Bio and Odyssey) up to 1 million GPU computing hours each on the UK’s supercomputer network. They will use this computer to train new models and run simulations.
“Sovereign AI is unlike anything the government has done before. Its unique approach will help break down the barriers that have too often held back British enterprise and innovation,” Liz Kendall, UK Technology Secretary, said in a statement. “This is how we ensure Britain’s economic prosperity and national security in the modern era.”
The venture capital fund is part of the UK’s wider plan to use AI to drive economic growth in the first place. describe in January 2025. As part of this plan, the government intends to “position the UK to become an AI maker, not an AI taker”.
Although the UK is home to leading companies like Google DeepMind, ARM and Wayve, critical segments of the AI production chain – particularly semiconductor design and manufacturing and model development – are dominated by competitors primarily located in the US and Asia.
By investing in domestic capabilities, the UK hopes to capture a greater share of the hundreds of billions of dollars invested in the AI sector, while minimizing its reliance on foreign technology which could become a liability in future negotiations with its trading partners.
“We’ve been too gullible to the narrative that innovation is happening in the United States, that we’ve lost the AI train and that we shouldn’t even think about it,” Rosaria Taddeo, a professor of digital ethics and defense technology at the University of Oxford, told WIRED in January. “It’s a dangerous narrative.”
It is highly unlikely that the UK can become entirely self-sufficient in AI, experts say, particularly when it comes to the development of general-purpose models, an area dominated by US companies OpenAI, Anthropic and Google. An isolationist approach, they warn, would risk cluttering the country with lower-quality, more expensive AI products. Instead, the Sovereign AI fund will focus on investing in domestic startups capable of controlling sections of the global AI supply chain.
“Even the United States and China are going to depend on others,” says Keegan McBride, director of science and technology at the Tony Blair Institute, a think tank founded by the former British prime minister. “The question is: if the world is irreversibly interdependent, how can we build the best possible position?
The UK would be better served, McBride argues, by targeted investment in startups with a chance of becoming indispensable in a particular niche (for example, specialist AI inference hardware or data center energy optimization) and in those developing AI-based applications. “There’s still a lot to gain,” McBride says.
The amount Sovereign AI can invest is small compared to the hundreds of billions the biggest AI companies spend on development. But as a co-investor alongside private venture capital firms, able to provide ancillary benefits such as access to IT, the new fund could become a valuable partner for founders trying to turn research concepts into viable businesses, says Tom Wilson, a partner at London-based venture capital firm Seedcamp.
“This is a huge opportunity for some of the defining businesses for future generations to start here,” Wilson says. “I don’t think (the new fund) will necessarily be a deal breaker. But it will be a hugely beneficial thing, if invested in the best possible way.”