A new report from Startup Coalition, Onward and the Tony Blair Institute for Global Change has set out the key issues the government must address to ensure the UK continues to be a leader in the artificial intelligence startup space for 2024.
Centring on four main challenges holding back the next generation of AI startups – access to talent, capital, compute and regulatory compliance – the paper comes at a critical time for the government to comprehensively assess its strategy towards small to medium-enterprise investment.
With US investors surpassing UK domestic funding towards UK startups, US backers have presently provided 37 per cent of all venture capital funding, in comparison to the UK, which has provided 31 per cent.
This article discusses the number of options that are available to decision-makers in government – ranging from tapping into capital locked away in the pension market, to forging stronger relationships with European partners, to creating a robust AI alliance hinged on knowledge and infrastructure.
International cooperation and AI
The growth of the AI industry holds enormous potential for the UK’s economic outlook.
In what has been an undeniably difficult period for startup investment, with the value of merger and acquisition deals falling to a 14-year low, AI holds the potential to have a seismic impact for SMEs and scaleups across the country.
Encouraging investors from across the globe to look towards the UK as a future tech powerhouse, the scope of the UK’s AI-driven recovery must be coupled with proactive legislation and regulatory guidance from the central government as a means to unlock the billions needed in funding, as well as co-operation with our neighbours across the channel.
One such advantage to working with Europe is the access to a dense labour market, including a broader access system targeting AI and startup talent from so-called AI capitals across the continent, including France and Germany.
An expansion of the High Potential Visa, as recommended by the Tony Blair Institute for Global Change, would be one such move that boosts the UK’s talent in the short term while also signalling a long-term commitment towards the sharing of global expertise.
Similarly, the negotiation of reciprocal agreements across the Atlantic will serve to enhance the appeal of the UK for the development of top AI talent.
Last month saw Microsoft announce a $3.2bn (£2.5bn) investment into the emerging sector, with one of the central pillars being the funding of broad-based skills and education programs.
Access to untapped capital from the pension market, facilitated by committed government reforms such as the Mansion House Compact, will also provide a promising avenue for AI startups.
The reforms aim to provide new investment vehicles within the British Investment Bank tailored to the needs of pension schemes, including a growth fund and a new venture capital fellowship scheme – aimed at unlocking £75bn in funding over the long term.
