Earlier today, UK Prime Minister Sir Keir Starmer announced the AI Opportunities Action Plan, led by tech entrepreneur Matt Clifford, Chair of the Advanced Research and Invention Agency (ARIA). The plan aims to deliver a decade of national renewal, boost economic growth, and enhance living standards. In fact, the initiative promises to generate £47 billion annually for the UK economy over the next decade, backed by £14 billion in commitments from major tech companies and projections of over 13,250 new jobs.
But what does this mean for the startup industry? Tech Funding News spoke to key market players to find out. Here’s what they told us.
Infrastructure investments in “AI Growth Zones”
The plan’s centrepiece, the “AI Growth Zones,” aims to boost startup infrastructure to the moon and back. The first such zone, Culham, Oxfordshire, will host one of the UK’s largest AI data centres, starting with 100MW capacity and planning to scale up to 500MW. This substantial increase in computing resources could level the playing field for AI startups, reducing barriers to entry and fostering innovation.
Speaking to TFN, RocketPhone CEO Muj Choudhury welcomes this concrete approach: “This bold new blueprint for AI could be exactly what Britain’s tech sector needs right now. The plan shows real ambition, and it’s refreshing to see infrastructure prioritised rather than buzzwords and empty promises.”
Similarly, Imran Ghory, General Partner at Blossom Capital, highlights the importance of computational resources in unleashing AI benefits. In a conversation with TFN, Ghory says, “It’s great the UK government has recognised that to unleash the benefits of AI, we need to have some joined-up thinking when it comes to computing, this nation’s data and talent—and not just focus on regulation.”
Interestingly enough, the plan also tackles the pressing power infrastructure issue for AI development head-on. noa investor Arjun Jairaj highlights the timeliness of this approach: “Data centres’ energy needs are incompatible with an ageing grid, so it’s refreshing to see this issue considered in the round following the government’s plan to introduce grid reforms and greater clean energy delivery in December.”
Economic projections and private sector involvement
The International Monetary Fund’s projections of a 1.5 percentage point annual productivity boost translate to the £47 billion addition to the UK economy mentioned in the original announcement. In a sense, this economic uplift presents influential opportunities for startups to capitalise on increased investment and activity in the AI sector.
However, industry experts’ concerns about foundational issues remain valid. As Choudhury predicts, “The projected £47bn economic uplift requires addressing fundamental challenges around data access, skills gaps, and computational costs. More importantly, we need mechanisms to ensure smaller, innovative companies can access these new resources and compete effectively.”
Furthermore, the private sector’s involvement extends far beyond initial reports. While three major tech companies have committed £14 billion to build AI infrastructure in the UK, this represents just the beginning. Vantage Data Centres has announced plans to invest over £12 billion in data centres across the UK, creating more than 11,500 jobs. Kyndryl plans to establish up to 1,000 AI-related jobs in Liverpool over the next three years, while Nscale has pledged a $2.5 billion investment to strengthen the UK’s data centre infrastructure during the same period.
Another key concern emerging from the startup community is the availability of growth-stage capital. Hiro Capital‘s Managing General Partner Luke Alvarez points out: “There is a big gap in the UK and Europe regarding growth-stage venture capital which will fund this innovation. The companies that can power this stuff are very capital-intensive in the compute needed for training models, hardware, software development, data centres and data.”
Simon King, Partner at Octopus Ventures, adds: “One area that hasn’t been addressed is access to late-stage capital for homegrown startups. There is a limited but closing window to build the Google, Amazon, or Meta equivalents in the age of AI in the UK. Huge investments — in the hundreds of millions — will be required if UK AI entrepreneurs are to compete on the global stage.”
The plan’s focus on transforming public services, particularly the NHS, through AI integration remains a key opportunity for healthtech startups. The government’s commitment to exploring opportunities in the domestic AI safety market, with a public update expected by spring 2025, addresses some skills development concerns that industry leaders raised. Quibim CEO Angel Alberich-Bayarri emphasises the potential: “The plan to harness the NHS’s unparalleled health data repository responsibly represents a transformative opportunity to advance diagnostics, treatment planning, and chronic disease management.”
Emphasis on skill development and implementation at scale
Multiverse CEO Euan Blair underscores the impact of the AI Opportunities Action Plan: “Being first to mass adoption is just as important as being first to innovation. We may have missed the first-mover advantage on LLMs and data centres. Still, it is encouraging to see the UK government recognise its other unique opportunity — to be the first to implement AI at scale.”
While the AI Opportunities Action Plan presents a promising framework for UK startup growth, its success hinges on addressing several critical challenges. Industry leaders emphasise the need for fair resource distribution, robust growth-stage funding, and comprehensive skills development to create an inclusive AI ecosystem that benefits businesses of all sizes.
The post How will the UK’s new AI plan impact tech startups? Experts comment! appeared first on Tech Funding News.