Three tech companies, one of which is VC-backed, are putting $14.3 billion (£14 billion) toward a UK government plan to grow the country’s AI infrastructure. VCs hope the move will give a much needed boost to country’s burgeoning AI sector.
The “AI Opportunities Action Plan,” which was introduced by Prime Minister Keir Starmer in a speech today (Jan. 13), includes measures designed to bolster the UK’s AI sector and position the country as a global leader in the technology.
Norway-based AI cloud platform startup Nscale—which closed a $155 million Series A in December—has pledged $2.5 billion over the next three years to build the UK’s largest sovereign AI data center by 2026. US-based Vantage Data Center plans to invest over £12 billion in data centers across the UK, while IT group Kyndryl will create up to 1,000 AI-related jobs in Liverpool by 2028.
The plan also includes the development of AI Growth Zones and loosens planning permission rules to ease the creation of new data centers. The first will be set up in Culham, Oxfordshire—home to the UK’s Atomic Energy Authority—with more to be announced later in the year.
The UK government also announced plans to build a new supercomputer as part of its efforts to increase public computing power twenty-fold by 2030. Last year, the newly-elected Labour party pulled £1.3 billion of funding for supercomputer and AI projects set up by the previous government.
The action plan has been backed by several AI giants including OpenAI and Anthropic, as well as many venture capitalists.
“It’s encouraging to see Starmer’s government doubling down on AI infrastructure to drive growth and efficiency, with a focus on the application layer where Europe can excel,” Robert Lacher, founding partner of London-based early-stage VC fund Visionaries Club, said. “Let’s hope this ambition translates into action—and sparks the rise of a new generation of AI category leaders in the UK.”
The UK is currently in the lead for AI VC funding in Europe with £4.5 billion invested last year, according to PitchBook data.
This is almost double the amount of funding seen in France in 2024 and triple that of Germany. However, it’s just over 5% of total deal value in the US, which reached a record £75.6 billion last year.
Although welcoming the UK’s new action plan, many VCs say the lack of funding for AI startups is a significant impediment to the country’s AI ambitions of building competitors to the likes of OpenAI and Anthropic.
“There is a big gap in the UK and Europe when it comes to growth-stage venture capital, which will fund this innovation,” said Luke Alvarez, managing general partner at Hiro Capital, another London VC fund. “The companies that can power this stuff are very capital-intensive in the compute needed for training models, in the hardware, in the software development, the data centers and the data. We simply don’t have anything like enough of that growth-stage VC funding here.”
UK Prime Minister Keir Starmer
Featured image by Leon Neal/Getty Images
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