View of the London city skyline with views over the River Thames and Waterloo Bridge at sunset on February 10, 2024 in London, United Kingdom.
Mike Kemp | In images | Getty Images
LONDON – Global technology entrepreneurs and investors are talking about Britain's potential to become an artificial intelligence powerhouse to rival the likes of the US and China.
But the country faces major challenges as it looks to become the world's third-largest AI hub.
At the London Tech Week conference at the Olympia event venue earlier this month, tech executives from around the world touted London and Britain as a place to invest.
They praised the well-connected technology and AI ecosystem, especially in London, and the prestige of many of the top universities and schools.
Alex Kendall, CEO of autonomous driving technology company Wayve, said his company is committed to London as its central headquarters.
Asked if he would consider moving the company – which recently raised a $1 billion funding round Soft Sofa and others – Kendall said Wayve's headquarters “will remain and remain in London.”
“I love the environment here,” he said in an onstage conversation with technology investor Brent Hoberman.
“For me, the special thing about London is that it is a tech superpower, but not dominated by technology. It is diverse and culturally rich.”
Wayve has offices in London, San Francisco and Vancouver.
American tech giants are betting big on Britain
Indeed, London is home to vibrant tech ecosystems, with prominent tech brands such as Sensible and venture-backed startups Revolut and Deliveroo.
But it has also been successful in attracting deep-pocketed American technology companies from abroad.
In 2014, Googling has acquired British-founded AI lab DeepMind, whose technology is now a core part of Google's AI product offering, including its generative AI tool Gemini.
Last week, Sales team opened its first leading AI center in London, as part of a five-year, $4 billion investment commitment in the UK announced last year.
The 40,000-square-foot space, located in London's Blue Fin Building skyscraper, kicked off its opening ceremony with an event attended by more than 100 developers.
Janet Coyle, managing director of London and Partners, said one thing that makes London attractive to tech companies is that leading companies, regulators and venture capital firms are within close proximity of each other.
“You can have a lot of meetings in one day,” Coyle said at the Salesforce AI Center last week. “You can actually meet the regulators, the financiers, the creatives, the developers.”
“You can have about six meetings in one day, while in other global cities you might have to travel across the country to meet with the regulators or the financiers,” she added.
London vs France
London faces heated rivalry from France for the title of European AI leader.
Last month, France held Viva Tech, the major trade fair for the country's technology industry, which attracted a total of 165,000 visitors.
Arthur Mensch, the CEO of France's leading AI startup Mistral, caused a lot of commotion during the show.
French generative AI companies have raised $2.29 billion in venture capital to date, more than their British counterparts, according to a report from venture capital firm Accel published last week.
The country is home to some of the best-funded generative AI startups on the continent, including Mistral, Hugging Face and H.
London Tech Week, which attracted a total of 45,000 people across the main event and a number of side events, generated less buzz than Viva Tech.
Hanno Renner, CEO of HR startup Personio, said European countries should view AI less as a competition and more as an opportunity to come together.
“The most important thing for me is that Britain and the EU work together to find ways to promote European innovation and ensure that talent currently based in Brazil and wanting to work in the technology sector does not go to Silicon Valley, but to Europe is coming. It doesn't matter if it's London, Paris or Berlin,” he told CNBC.
Can Britain retain its European AI crown?
The UK remains by far the largest AI hub in Europe.
Europe's best-funded genAI startups
| Company | Founding country | Founding city | Total funding raised |
|---|---|---|---|
| Mistral | France | Paris | $1.1 billion |
| Alef Alpha | Germany | Heidelberg | $641 million |
| Hugging face | France | Paris | $396 million |
| Owkin | France | Paris | $335 million |
| H | France | Paris | $235 million |
| Synthesis | United Kingdom | London | $157 million |
| Stability AI | United Kingdom | London | $151 million |
| PolyAI | United Kingdom | London | $118 million |
Source: Accel
In 2023, UK AI companies raised more than $3 billion in venture capital – more than double the amount raised by startups and scaleups in France, Germany and any other European country, according to a report from trade organization Tech Nation.
However, critics have cast doubt on Britain’s ability to continue to lead the way as Europe’s leading AI hub, saying a number of factors, including the fallout from Brexit and low technology adoption, could harm its future prospects.
“There are greater barriers for people to come to the U.K. and work there because of Brexit,” Sanjot Malhi, a partner at venture capital fund Northzone, told CNBC's “Beyond the Valley” podcast earlier this month.
“The UK has had very good policies in terms of visa availability and streamlining visa processes, especially for technology workers and so on.”
“But I do think there's a lot more that can be done to streamline that and make it more accessible, and thereby create a more thriving tech environment,” he added.
The expectation that a general election is looming in the country also creates political uncertainty.
Many tech executives CNBC spoke to say they want more tech-friendly rules in the future. One big question is boosting IPOs and the UK stock market.
Philip Belamant, CEO of British fintech company Zilch, said he wants to take his company public in Britain but will wait to see if more relaxing rules are introduced before reaching a conclusion.
“We have specific questions from Britain and policies to ensure that a stock market listing in Britain is something that means this company can prosper and is the best decision for our shareholders. What we would really like is that these are implemented.”
Looking for regulatory clarity
Another major source of uncertainty for technology leaders is the future of AI regulation in Britain. The current government has shaped the regulation of AI in Britain with a flexible, light-hearted approach.
Rather than introducing new legislation for AI, as the European Union has done, Britain is instead trying to apply existing regulations to the technology.
Some experts worry that this approach will create legal uncertainty for companies developing and using AI, which is progressing at a rapid pace.
Matthew Holman, technology and AI partner at law firm Cripps, said the lack of any formal regulation for AI in the UK is ultimately a “net loss” for the UK.
“This is because most organizations in the technology world desire certainty to create an environment where creativity and ROI can be maximized [return on investment]Holman told CNBC in an emailed comment.
