The UK is a leader in AI, with Europe’s largest group of over 5,800 AI companies and 200 unicorns, and a strong research pipeline from DeepMind, AlphaFold and Waveve. Still, the country has struggled to keep these companies growing domestically. Today, the government is launching an initiative to address this problem.
The Sovereign AI Fund, which is backed by up to £500m from the Department for Science, Innovation and Technology, will open at Wave’s London headquarters on Thursday 16 April. James Wise, a partner at Balderton Capital who has worked with companies such as GoCardless, Depop and Convergence, will chair the fund while maintaining his role as a venture capitalist.
The fund was first proposed in the AI Opportunities Action Plan 2025 and endorsed by Chancellor of the Exchequer Rachel Reeves as part of a £2.5bn AI and quantum program in May’s speech in March.
What we offer to founders
The fund is a co-investment platform that gives UK AI scale-ups three key benefits beyond funding. Special access to national computing resources such as Bristol’s Isambard-AI supercomputer and Cambridge’s Dawn, public procurement opportunities and an Advanced Market Commitment program worth up to £100m.
The program will see the government become the first customer for UK AI hardware developers if their products meet certain performance criteria. The fund has already put £8m of seed money into the OpenBind consortium, which is creating a molecular binding dataset 20 times larger than its predecessor to accelerate AI-driven drug discovery.
Even the skeptics have a point.
The size of the fund is very concerning. SemiAnalysis estimates that Microsoft alone will spend around $120 billion on AI infrastructure over the next two years, so £500 million seems small by comparison.
The fund will be judged on how well it prevents companies from moving to places like San Francisco. The government is expected to publish investment criteria and full governance details in the coming weeks.
As one legal analysis points out, while this opportunity is significant, founders must now navigate a complex system where alignment with government priorities is as important as business performance.
