UK launches £500m Sovereign AI fund as Kendall backs ‘British winners’
The UK government has unveiled a £500m push to scale domestic AI firms, as ministers step up efforts to anchor the next wave of tech firms on home soil amid growing competition.
Tech secretary Liz Kendall is set to launch the new Sovereign AI Unit in London on Thursday, casting it as a central pillar of the UK’s tech industrial strategy.
Operating as a state-backed investment vehicle, the fund will target British AI firms to help them scale and compete internationally, rather than relocating or scaling elsewhere.
Kendall will say the programme is “one of the single most important things this government will do for the future of this country”, as ministers look to translate the UK’s research strength into global tech leadership.
The launch comes as London-based autonomous driving firm Wayve secured a further $60m from chipmakers including AMD, Arm and Qualcomm on Wednesday, underlining continued investor appetite for UK AI scaleups.
State-backed capital meets scale-up gap
The Sovereign AI Unit will also provide access to national compute infrastructure like supercomputers, research support, procurement opportunities and regulatory guidance.
It has been designed to address a longstanding gap in the UK ecosystem, where companies often excel at early-stage innovation but struggle to scale and compete on a global scale.
The UK currently hosts more than 5,800 AI firms and around 200 unicorns, making it the largest AI ecosystem in Europe. Meanwhile, startups raised roughly £6bn last year, with funding momentum continuing into 2026.
Yet, policymakers have increasingly voiced concern that promising companies are either sold early or shift operations abroad due to funding constraints and market access challenges.
The new fund was first outlined in the government’s AI Opportunities Action Plan and forms part of a broader £2.5bn commitment spanning AI and quantum technologies.
Backlash risk
The announcement comes as pressure builds on the government to demonstrate that the economic gains from AI will be widely shared.
A recent report from Institute for Public Policy Research warned that without intervention, AI risks concentrating power among a small number of tech firms while widening inequality and displacing jobs.
The think tank urged ministers to go further by redistributing returns from public AI investments and ensuring the technology delivers tangible benefits across public services such as healthcare and education.
Public concern around AI is also rising, with calls for stronger safeguards and clearer governance as adoption accelerates.
Ministers have framed the Sovereign AI Unit as part of that response, positioning the state not just as a funder, but as an active participant shaping how AI is deployed across the economy.
The first cohort of companies receiving backing from the fund is expected to be announced alongside the launch.