The UK government’s Sovereign AI Venture Fund and the British Business Bank joined a funding round of more than £500 million for AI chip startup Fractile.
The UK government announced that its Sovereign AI Venture Fund and the British Business Bank have invested in Fractile, a UK startup developing AI hardware, including AI chips. The investment is part of a government effort to back British chip designers and other AI hardware companies. The two joined a Series C funding round of more than £500 million, valuing Fractile at more than £5 billion. Neither disclosed its amount. The British Business Bank is the UK economic development bank, which invests in growing UK companies.
Other investors in the round include Alphabet, through its independent growth fund CapitalG, and the venture capital firms Lightspeed and Redpoint. The government said Fractile is working to make AI hardware faster, cheaper, and more energy efficient.
The UK wants less reliance on foreign chips
The government wants Britain to rely less on foreign suppliers for AI hardware. It gave these reasons:
- Britain depends on fragile overseas supply chains for critical technology.
- Too often, the business rewards of British breakthroughs have gone abroad.
- More of the jobs and economic value from AI hardware should stay in Britain.
The European Union has also warned about depending on foreign AI suppliers. In July, the European Commission office that oversees AI warned that the next one to two years could decide whether Europe stays dependent on foreign AI providers.
The finance minister confirmed more money for AI
At the Oct. 28 budget, the UK finance minister confirmed an extra £140 million for Sovereign AI. Sovereign AI is the government program behind the Venture Fund. Separately, the government plans to invest up to £2 billion over the coming years in AI computing infrastructure, such as data centers.
Bloomberg reported an Anthropic deal for Fractile chips
In August, Bloomberg reported that Fractile reached an initial deal to supply Anthropic with about $250 million of chips, and that those chips were not expected to be ready until 2027. The report said the deal was meant to grow over time. Fractile and Anthropic declined to comment.
Fractile plans to expand in Bristol
The government said Fractile plans to grow in Bristol, one of its two bases, along with London, and linked that growth to good jobs.
