Investment in the UK’s AI Companies
What does AI startup investment look like in the UK?
Recently I was invited to speak on an AI panel at the Oxford Saïd Entrepeneurship Forum. The day started with an inspiring keynote by Starling Bank’s Anne Boden, about entrepreneurship in deep tech and issues around equality. That led me to dig into the statistics around investment in the AI industry, particularly in the UK.
First, the AI industry is booming! In 2022, $64bn in funding went to AI companies around the world, with 55% of that going to US-based companies [1].
Here in the UK, 2022 saw $3bn in AI investments [2]. That puts the UK third in the world for investment, behind the US and China. Meanwhile, one in six UK organisations are using AI technology, and there are over 3,000 companies here building AI solutions.
This is great news for the UK. With the rise of generative AI through 2023, there’s a lot of excitement about the benefits that AI can bring to the world and a lot of potential to unlock.
Yet, investment isn’t evenly distributed [3]. Research at the Turing Institute found that on average, female-founded AI companies raise £1.6m in each funding round compared to male-founded AI companies who raise an average of £8.6m — that’s 6 times lower. This is a worse ratio than the tech world in general, where female teams raise on average 4 times less than their male counterparts.
And the picture is even worse when we look at total amounts of money raised. Between 2012–2022, 79.3% of the UK’s £69.5bn capital raised in VC deals with AI companies went to male-only founding teams, only 0.3% went to female-only founding teams, and the rest to mixed teams. That’s despite the fact that 20% of AI and Data Science professionals in the UK are women. There are a lot of women missing from this picture, and it’s likely similar for other underrepresented groups.
This isn’t a new problem, but is a dynamic that’s stubbornly hard to change. Still, plenty of work is being done. Anne Boden’s keynote touched on her work at the government’s Women-led high-growth enterprise taskforce, which is due to report early next year. VC firms are working hard to increase the number of female investors, and the Turing’s recent report makes a number of recommendations.
Despite the inequality in funding, AI investments show no sign of slowing anytime soon. There’s a lot of excitement about this technology, and it’s a great time to be building in the field.
