The UK government has launched a venture capital fund to invest in domestic artificial intelligence start-ups as part of a bid to minimize the country’s dependence on technology manufactured abroad.
The Sovereign AI Fund will invest approximately $675 million in domestic startups in fields ranging from model development to agentic artificial intelligence to drug discovery. In addition, portfolio startups will have access to the UK’s fleet of supercomputers, free visas for international workers, public procurement opportunities and expert government advice.
Sovereign AI will be led by James Wise, partner at VC firm Balterdon Capital, and Joséphine Kant, formerly of Dogwood Ventures and Y Combinator, an accelerator program funded by helped found OpenAI.
On Thursday, the fund announced an investment in Callosum, a startup that creates software that helps different classes of processors work together effectively. The fund has awarded a further six startups – Prima Mente, Cosine, Cursive, Doubleword, Twig Bio and Odyssey – each with up to one million GPU computing hours on the UK supercomputer network. They will employ these calculations to train recent models and run simulations.
“Sovereign AI is unlike anything the government has ever done. Its unique approach will help break down the barriers that too often hold back British entrepreneurship and innovation,” Liz Kendall, Britain’s technology secretary, said in a statement. “This is how we ensure Britain’s economic prosperity and national security in the modern era.”
The venture fund is part of a wider UK plan that aims primarily to employ artificial intelligence to boost economic growth scratched in January 2025. According to the plan, the government intends to “position the UK as a creator of artificial intelligence, not its recipient.”
While the UK is home to prominent companies such as Google DeepMind, ARM and Wayve, critical segments of the AI production line – particularly semiconductor design and manufacturing and model development – are dominated by rivals based mainly in the US and Asia.
By investing in domestic capabilities, the UK hopes to capture a larger share of the hundreds of billions of dollars flowing into the AI sector, while minimizing reliance on foreign technology that could become a liability in future negotiations with trading partners.
“We have been too gullible to the narrative that innovation is made in the U.S. — that we have lost the AI train and shouldn’t even be thinking about it,” Rosaria Taddeo, professor of digital ethics and defense technologies at the University of Oxford, told WIRED in January. “It’s a dangerous narrative.”
Experts say it is highly unlikely that the UK can become completely self-sufficient in artificial intelligence, particularly in relation to general-purpose model development – a field dominated by US OpenAI, Anthropic and Google. They warn that an isolationist approach would risk burdening the country with inferior and more steep artificial intelligence 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 will be dependent on other people,” 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 do we build the best possible position?”
According to McBride, this would best bring the UK targeted investment in start-ups that can become indispensable in a particular niche – say, specialist AI inference hardware or energy optimization in data centers – and in those developing AI-based applications. “There is still a lot to gain,” McBride says.
The amount that sovereign AI can invest is diminutive compared to the hundreds of billions that major AI companies spend on development. But as a co-investor with private VC firms, able to provide additional benefits such as access to computation, the recent fund could become an invaluable partner for founders trying to combine research concepts into profitable enterprises, says Tom Wilson, partner at London-based VC firm Seedcamp.
“This is a huge opportunity to get some of the key businesses of future generations started here,” Wilson says. “I don’t think so [the new fund] will certainly be the deciding factor. But it will be an extremely beneficial piece if invested in the best way possible.