In the Artificial Intelligence sector, for example, Tech Nation’s review of venture capital investment in UK companies for 2018 highlights an impressive set of figures. 2018 set a new record, with 82 fundraisings above $2 million, and a total amount raised of $1.3 billion. Leading AI innovators in different fields like autonomous vehicles (FiveAI, Starship), computer processing (Graphcore, Cambridge Quantum) and security (Darktrace) are UK-based.
However, the UK’s figures are dwarfed by investment in the US and China. Overall capital invested in digital tech in the US reached nearly £45 billion in the year to August 2017, with China at £22 billion and the UK under £5 billion.
Tech Nation highlights talent as critical to gaining an international advantage. It is notable that recent graduates make up 39% of the tech workforce in Beijing compared to 4% in London.
While investment decisions are made for many different reasons, government policy provides the ecosystem within which businesses can grow. The UK Government is committed to promoting growing, innovative companies. Two key projects, the Industrial Strategy and Patient Capital Review, aim to support growth and investment.
The Industrial Strategy and support for technology
The launch of the UK’s Industrial Strategy in November 2017 demonstrated a new, more structured approach to improving productivity. At the heart of this initiative is a focus on innovation, with targeted sector deals for the AI, automotive and creative sectors, amongst others.
The December 2018 a progress review Forging our future: Industrial Strategy - the story so far looks back at the first year. Highlights include a commitment of £45 billion of Government funding, and support for 78,000 start-ups and growing businesses through the British Business Bank.
The review included an announcement of three new sector deals. These include an aerospace sector deal, which will promote the development of drone technology and hybrid and electric aircraft.
In each of the selected sectors, targeted funding, often alongside industry partners, aims to pave the way for the development of new technology and the growth of new businesses. In the automotive sector deal, for example, Government is investing £246 million over four years to promote improvements in battery technology (the Faraday Battery Challenge).
Support for skills and training was one of the main recommendations made by Wendy Hall and Jérôme Pesenti, in their 2017 review preceding the AI sector deal.
“To develop more AI, the UK will need a larger workforce with deep AI expertise, and more development of lower level skills to work with AI.”
A recently announced joint project to develop AI skills, with backing for specialist training including PhD and masters places, will be co-funded by industry players alongside Government. This will include up to 200 new Masters places at UK universities, 1,000 PhD places at 16 Research and Innovation AI Centres for Doctoral Training, and five research fellowships.
Promoting access to capital for early stage businesses
Alongside the targeted projects making up the Government’s Industrial Strategy, UK policy has focused on finding ways to enable growing, innovative businesses to obtain access to patient capital. Funding specialist, Dona Ardeman, discusses the progress of this project here.
Looking to the future
The active engagement by UK Government with the challenges faced by innovative start-ups and growing businesses is encouraging. Obviously, Brexit presents serious issues for technology, but we remain optimistic that UK business will remain a strong investment prospect.