May 13, 2024

‘Not being subject to the EU’s regulatory fervour is massively working in our favour’ - AI thrives in Brexit Britain

The UK's AI sector had one of its most successful weeks thanks to hard work, cutting-edge research — and an influential Liverpool fan

Tim Smith

5 min read

Image: Ilya Grigorik

The sun is rising on a new week in UK AI with many in the sector feeling more optimistic than they did last Monday. 

The country has always been a hub for the technology, with Amazon Alexa, AI research lab Google DeepMind and some of the world’s leading self-driving car innovation all starting life here.

But recents events have seen Paris steal some of the European spotlight. French foundation model company Mistral has landed hundreds of millions of dollars from investors like Microsoft (and is reportedly raising hundreds of millions more) while former Github, Nvidia and Tesla staff have also raised chunky rounds to launch much-hyped startups in the city.


But, in the space of a working week, two leading US companies — training data platform Scale AI and cloud computing provider CoreWeave — announced plans to open their European HQs in London, with the latter committing £1bn to invest in UK operations. Separately, self-driving car company Wayve announced a $1.05bn investment from Softbank, Nvidia and Microsoft — a record round for a European AI company.

Founders and investors say deals like these are the result of years of hard work and cutting edge research, and also a sign of the UK finding its feet in a post Brexit world. And, surprisingly, one influential Liverpool Football Club fan has had a big impact too.


CoreWeave’s chief business officer Mike Mattacola tells Sifted that the company chose the UK as its European HQ due to “a great talent pool” and “access to a world-leading financial services sector,” adding that Brexit “did not affect” its decision process.

And while there have been concerns about an R&D brain drain in the UK since the country left the EU, some AI founders believe that the decision is now starting to pay off, as the country sets its own regulatory agenda.

Roeland Decorte is the founder of AI healthtech company Decorte Future Industries and the president of the AI Founders Association in the UK. Originally from Belgium, he says that Britain's less strict regulatory stance on AI compared to the EU has made a big difference to founders launching startups.

“At the time I was not a supporter of Brexit, but if Brexit hadn’t happened I probably would have already moved my startup to the US,” he says. “This is obviously a very clear instance where the UK not being subject to the EU’s regulatory fervour is massively working in our favour.”

The EU is currently finalising what is likely to become the most comprehensive AI regulation in the world, which — unsurprisingly — has been criticised by some entrepreneurs for being too heavy handed. It could include companies having to adhere to strict and potentially expensive compliance checks if they are deemed “high risk”. The UK, meanwhile, is taking a slower approach to putting the legislative brakes on development.

“I think the UK’s approach is the right one. The combination of avoiding premature regulation but building state capacity — in the form of the AI Safety Institute to monitor progress — encourages innovation while keeping on top of potential risks,” Decorte tells Sifted. “I think we’ll look back and say the UK got the balance right here.”

Language and business culture helps too, says Nathan Benaich, founder and general partner at London AI investor Air Street Capital. 

“The UK is probably the easiest place to do business in Europe if you’re a US tech firm. Not only do you avoid burdensome EU regulations, the government is unusual in being prepared to champion the work of overseas companies publicly,” he says. “We also shouldn’t underestimate the importance of shared language — it removes a significant degree of potential friction.”


Anfield till I die

Like CoreWeave, Scale AI cited the UK’s “hotbed” of talent as one of its reasons for choosing the country as its European base. Apart from strong research universities, many agree that a big reason for the concentration of bright AI minds is Google DeepMind’s London HQ.

“DeepMind has become the heart of all Google’s AI efforts — I still think that’s an underrated fact, that arguably the number one AI company in the world has its base here in London,” says Matt Clifford, chair of ARIA, the UK R&D agency, and cofounder of company builder Entrepreneur First. “Think how easy it would have been for the company to move post-acquisition or for [DeepMind cofounder] Demis Hassabis to move to Mountain View [San Francisco] once he took charge of all Google’s AI efforts.”

Siddhant Jayakumar, founder of AI investment platform Finster and former DeepMind research engineer, tells Sifted there’s a surprising reason that’s kept the Google-owned AI lab on UK shores.

“We should all be grateful that Demis is a Liverpool fan and didn't want to move any further away from Anfield,” he says.

It’s not all roses

While last week was a good one for the UK’s AI sector, there’s still work to do.

“The UK public markets are dead, and as long as that is the case, companies will move westward,” says Jayakumar. “The other thing we need is UK based early-stage employees founding companies themselves. This only happens when we get more liberal with equity grants and people pay it forward.”

Benaich adds that “resolving the high cost of living, energy prices, and creaking infrastructure” are crucial to keep the UK’s tech economy moving forward, and that the country needs to whet its appetite for risk if it wants to compete with US AI companies.

There’s also the fact that well-capitalised US companies opening up shop in London will pour gasoline on an already burning-hot talent market, where startups have to pay eye-watering salaries to get the best people.

“It can create challenges because you’re competing for talent,” says Amelia Armour, partner at early stage UK deeptech investor Amadeus Capital Partners.

But she believes that some potential initial pain will be outweighed by more senior deeptech company builders coming to the country.

“One of the things that we really, really lack is this senior level talent. We've got great research, great universities, we just haven't gotten enough companies that have scaled,” she says. “For the whole ecosystem, it's really positive.”

Tim Smith

Tim Smith is news editor at Sifted. He covers deeptech and AI, and produces Startup Europe — The Sifted Podcast . Follow him on X and LinkedIn