UK funding for AI startups surges but still lags behind US
AI startups captured 25 per cent of all UK venture capital funding in 2024, totalling $15.9bn (£12.8bn) – a sharp rise from $3.1bn (£2.5bn) four years ago.
Balderton Capital’s latest data shows that 2024 was the second best year on record for AI investment in the UK.
The sector’s value has more than doubled in that time to $236.9bn (£191bn).
The VC firm also found 20 AI unicorns in the UK, including Wayve, Exscientia, and Oxford Nanopore Technologies.
These make up 11 per cent of all UK unicorns.
AI investment lags
Despite Balderton Capital‘s encouraging data, the UK and Europe still lag behind the US in investment growth.
European AI startups as a whole captured 25 per cent of all European VC funding in 2024, amounting to $13.6bn (£10.9bn), a 15 per cent uptick in the past four years.
The data, compiled by Balderton Capital, reveals that European AI startups collectively doubled their value in four years to $508 billion.
This now represents nearly 15 per cent of the tech sector’s total value, up 12 per cent over three years.
However, the VC firm’s general partner, James Wise, noted that these results counter Europe’s “relatively negative narrative” within the sector.
“You can raise hundreds of millions (euros), even billions as a very early-stage AI company if you’ve got a breakthrough technology in Europe, just as you can in the US”, he said.
Despite this progress, the US remains a dominant force in AI funding, with deeptech startups capturing 33 per cent of US early-stage venture capital in 2024, according to Atomico’s report.
European tech sector struggles to attract talent
The continent also faces a persistent challenge in retaining tech talent, as 492 European tech workers migrated to the US in 2023.
Attractive salaries at leading tech firms such as Google, Amazon and Microsoft have drawn in workers.
More positively, investment in Europe’s AI isn’t strictly domestic; US firms are increasingly looking to Europe for talent and opportunities, as European founders stand behind an estimated 10 per cent of US startups.
However, much of the region’s funding is still rooted outside of Europe, underscoring its dependence on external capital.
AI remains a promising sector for European and UK tech, with industry leaders remaining optimistic about its growing potential.
Hargreaves Lansdown’s head of money and markets, Susannah Streeter, deemed AI: “The most exciting and fast-moving sector”, expecting 2025 to be “pivotal” for its growth.
Atomico’s report also highlighted Europe’s progress in climate tech, which captured 21 per cent of climate VC funding, almost doubling the 11 per cent in the US.
Yet, the broader European tech sector faces ongoing competition with its rivals across the pond.