Fractile lands $220m as ministers hail ‘vote of confidence’ in UK AI
British AI chip startup Fractile has raised $220m (£165m) in fresh funding with the government pointing to the deal as evidence the UK can produce globally competitive AI infrastructure companies.
The London-founded company, which is developing next-generation chips designed to speed up AI inference – the by which AI models generate responses – said the Series B round was led by Accel, Factorial Funds and Peter Thiel’s Founders Fund, with backing from investors including Conviction, Felicis and 8VC.
The raise comes amid intensifying global competition to build the hardware underpinning AI systems, with investors increasingly focused on inference, rather than simply training ever-larger models like ChatGPT.
AI minister Kanishka Narayan labelled the deal “a strong vote of confidence in British AI”. “It shows that UK companies at the cutting edge are pulling in global investment while anchoring high value jobs and expertise here at home,” he said.
“AI will be critical to the UK’s future prosperity and security, and next generation AI chips like Fractile’s are a key part of making that happen.”
The government is expected to publish its AI hardware plan later this year as ministers attempt to strengthen Britain’s position in the tech’s infrastructure.
Fractile bags funding as competition soars
Founded in 2022 by Oxford-trained engineer Walter Goodwin, Fractile is attempting to tackle the cost and speed of generating AI outputs at scale.
Goodwin said: “We bet everything on the logical conclusion: that the only way to truly unlock this latent value, to make speed viable at scale, was to radically re-invent the hardware that we run our frontier AI models on”.
The company has argued that current chip makers are struggling to cope with the demands of increasingly complicated AI workloads.
“At the roughly 40 tokens per second at which these models tend to run on existing chips, a single output of this length takes a month to complete,” Goodwin said.
Fractile is developing chips intended to reduce those bottlenecks by redesigning how memory and power interact inside these AI systems.
The company claims its approach could significantly improve speed while lowering costs and energy usage compared with traditional GPU systems.
The funding round adds to growing momentum around UK AI startups, coming on the same day Isomorphic Labs announced a $2.1bn Series B raise to expand its AI-powered drug discovery platform.
The surge in investment reflects growing demand for alternatives to dominant AI infrastructure providers such as Nvidia, whose chips remain central to the current AI boom but face mounting pressure over supply constraints, energy usage and cost.