Sovereign AI Quarterly Update #2
This is my second quarterly update on our progress and goals at Sovereign AI, I'm now just under 6 months into the role. As before, this represents my own views on our work, and I'll attempt to be as comprehensive and transparent as possible without sharing anything commercially or operationally sensitive. Feedback on format and content is always welcome.
Firstly, I want to say a huge thank you for the incredible support we've received from the tech industry, researchers, investors, and the Government since starting this role. The energy in the British AI ecosystem, and the progress being made, is incredible.
The last month in particular has been one of significant delivery. We held our formal launch at Wayve's London HQ. We executed on our first investments. We published the criteria the fund will focus on initially. And we've hired critical team members – including our Managing Partner, who we'll announce in the coming weeks. Behind the scenes, we've developed new financial instruments, developed our business case with HMT, set-up our internal investment processes, and put MoUs in place with the most important public finance bodies in Government to ensure deep alignment.
It's been many long hours and unglamourous work, and I'm incredibly proud of what the team delivered.
I also feel we've added to an important part of the national conversation around AI sovereignty. As the Secretary of State shared clearly at RUSI last week:
"If we retreat from progress we retreat from the world, leaving this powerful technology to be exploited by other nations to their advantage and our disadvantage. The choice isn't between a world that has AI and one that does not. It is a choice between a world where we shape our AI future, based on our own interests and values, or where we are left at its mercy and whim."
AI Sovereignty, in critical parts of the AI stack, is not a choice - it is something we must achieve. AI will progress with or without us. The only question is whether Britain is at the table. One of the principal ways we will be at that table is by ensuring the UK is home to some of the world's most important AI companies, which is our goal at SovAI. We are more determined than ever to deliver on that. To be insular in our outlook and modest in our ambitions would rob future generations of opportunity and betray our rich scientific and commercial heritage.
Quarterly Report #2
Progress against Q1 goals
In the last update I set out four goals for the quarter: to set-up an independent legal and operating structure; hire the leadership of the investing function; refine our offer to founders; and launch the fund itself. We delivered on all four.
The fund formally launched, on schedule, on 16 April at Wayve. The Secretary of State opened the event and we had over 150 attendees and national press coverage. Reaching that milestone on the timeline we set ourselves - quicker than many newly formed commercial venture funds achieve - reflects an enormous effort by the team and our partners across Government.
The legal and operating structure is now agreed, with our Investment Committee able to operate with a level of independence and pace I believe is unique within Government, and we have completed our first investments, more on that below.
On the team, we've hired our Managing Partner for the investment function, who will be announced in the coming weeks. We've also brought in further senior expertise from venture, deep tech and the Civil Service. We will be announcing the lead on that part of our work in a similar time frame.
On the offer to founders, the response from the entrepreneurial community has been far warmer and more engaged than I expected. So far, we have received over 130 applications for compute access – totalling more than 60 million GPU hours of demand – and almost 100 direct applications for equity funding. That signal alone tells me the offer is landing. We are now working to expand our resources, and deliver on the promises. Our KPI to respond within a week is just about holding, we're still waiting on a critical Outlook integration ( yes....) to automate this process more. You can apply now via our website, but please do check out our focus criteria first!
First investments
We've publicly announced our first two equity investments:
Callosum, founded by Cambridge PhDs Danyal Akarca and Jascha Achterberg, builds systems-level software that orchestrates AI workloads across heterogeneous chip architectures – co-optimising models, workloads and silicon in real time. As inference becomes the dominant compute constraint and the hardware landscape fragments beyond traditional GPUs, this orchestration layer is set to become one of the defining platforms of the next generation of AI. Headquartered in London, and accelerated by ARIA, Callosum was Sovereign AI's first equity investment and a strong validation of both the ARIA and SovAI model.
Ineffable Intelligence, founded by David Silver – Professor at UCL and formerly head of reinforcement learning at Google DeepMind – is building a new class of self-learning systems designed to discover knowledge from their own experience rather than from human-generated data. We co-invested alongside the British Business Bank in a $1.1bn seed round led by Sequoia Capital and Lightspeed Venture Partners, with participation from Index Ventures, Google, Nvidia and others.
These companies are perfect examples of the SovAI fund's purpose in action: Work with exceptional founders, invest alongside world-leading funds, take risks that if they pay off, could be transformative to Britain's economic and national well-being. Thank you David, Danyal and Jascha for taking the risk of working with a little known Government entity!
We have six more companies at the final stage of our Investment Committee as of this week, and expect to announce further investments in the coming month.
Investment Criteria
At our launch we laid out our investment criteria, agreed by the Sovereign AI board. This includes our sectors of focus, which will always be public on our website, they are:
03 AI In Health & Life Sciences
Alongside these criteria, as we state online as well, are requirements that a company is anchored in the UK, and complies with British law. These two points are obvious, and we have been explicit about them many times.
I knew that an important effort like SovAI would attract interest, and much of it is welcome when offered in good faith. However, a small minority of very online people have spread misinformation about this, and sent in comments to newspapers (we have had a correction made already, but as they say a lie travels faster than the truth). So to share our principles again:
As it states on our website, in our diligence processes, and as we have shared many times: we only invest in companies that comply with UK law, including copyright law.
Second, we are focused solely on companies that contribute to the UK's AI sovereignty. Every company we invest in must have a heavy UK nexus: for instance founders and engineers based here. In a vast majority of cases this also means a UK legal 'top-co'. But there will be a few exceptions. For instance, many brilliant UK founders go through Y-Combinator or Entrepreneur First US and start with a Delaware topco even when they then build their company in Britain. (For what it's worth, I'd advise against doing that. We lived through this at Balderton with GoCardless, and I think it's better to start with a UK topco). As the Secretary of State explicitly said in her launch speech, part of our mission is to bring companies like that, which were founded elsewhere back to the UK – to make this a place that you can build and scale here while winning everywhere.
So of course we will occasionally work with companies that have some operations or a legal entity abroad. Britain isn't an insular nation, we want our best companies to have offices across the globe, SovAI is here to help capture more of the value they create here, by making the UK the most compelling place to build in.
If Sir Demis Hassabis himself were to start a company that happened to have a US topco, but was entirely based in the UK, should we support it? Of course we should. The only people who oppose these nuances are those who oppose the UK having any AI companies at all.
Hiring update
We're continuing to build out the team. Alongside our Managing Partner announcement in the coming weeks, we are actively recruiting two Investment Partners to lead deals end-to-end, build pipeline, and help shape the funds' investment strategy. Full details of the role – responsibilities, compensation and how to apply – are on our website at sovereignai.gov.uk/about.
If you, or someone you know, would be a strong fit, I'd encourage you to apply or reach out directly. Other roles within SovAI are listed on the site as well.
Focus for Q3
Four priorities will shape the next quarter.
Continued investment in our priority areas. As mentioned, we have a full pipeline of early stage AI companies that meet our key criteria to execute on. As more investment professionals join in the coming months, we expect to ramp up our investment activity.
Strategic research collaborations. In addition to the equity investments and compute grants we've made publicly, there is significant work going on in a number of critical research programmes. Our specific focus at the moment is automated labs and data for life science. I can't wait to share some of the breakthroughs the team are working on in the next update.
Procurement. We have launched our latest procurement programme and have been fortunate to receive hundreds of survey responses and a large amount of data feeding back on the best way to deliver this. Advance market commitments – where SovAI directly procures solutions from UK AI companies that meet a bar set by other parts of Government – remain one of the most powerful levers we have. Getting this right is a priority for us and we will be running more processess on this, in particular around novel compute, in the coming months.
UK tour. As announced on our various social channels, we are beginning a tour of the UK to connect with more founders and investors. While we have a specific sector focus, AI, rather than a geographic one, the talent, ideas and ambition we want to back are everywhere, and Sovereign AI must be too. I will definitely be at the Manchester event and hopefully others.
Thank you all again for your engagement, feedback, the questions and the patience. As ever, this update reflects my own views, and if you'd like to support please do get in touch via the website.
Best,
James
( P.S the launch videos are now up on our excellent YouTube channel )