The Pulse
UK backs Fractile in AI hardware round worth over £500 million
The UK’s Sovereign AI Venture Fund and British Business Bank have backed Fractile in a Series C round worth more than £500 million. The government says the round values the AI hardware company at over £5 billion.
Fractile has secured backing from the UK’s Sovereign AI Venture Fund and the British Business Bank in a funding round worth more than £500 million, the government said on November 11. The investment values the AI hardware company at over £5 billion, according to the announcement.
The Series C round also includes investors CapitalG, Lightspeed and Redpoint. The company, based in London and Bristol, is developing chips for artificial intelligence.
The public investment
The Sovereign AI Fund invests directly in early- and growth-stage UK AI companies. Typical equity investments are expected to be worth around £1 million to £10 million, although individual circumstances differ. The government says it does not comment on specific investment figures because they are commercially sensitive.
Ministers have framed the backing as part of an effort to develop more AI technology in Britain and reduce dependence on overseas technology. The British Business Bank is the UK’s economic development bank and provides finance intended to help businesses start up, grow and remain in the country.
Fractile’s hardware work
The government describes Fractile’s work as spanning chips, software and fundamental machine-learning research. In a May post, Fractile’s Walter Goodwin said the company had been working across AI research, foundry process innovation and chip micro-architecture.
Goodwin argued that limits on inference speed, particularly memory bandwidth on current architectures, constrain progress. Inference is the process of running AI models to produce outputs.
The company said some large language models were producing up to 100 million tokens while tackling hard problems. At around 40 tokens per second, the rate at which those models tend to run on existing chips, a single output of that length takes a month, it said. Goodwin estimated that reducing that month to a day would require output of around 1,200 tokens per second, alongside handling the demands of large models operating with very long contexts.
Fractile’s May post reported that the company had raised $220 million to build inference hardware. It said the company was building chips and systems intended to address the time taken by capable AI systems to produce useful outputs.
UK expansion and policy
In a February speech, AI Minister Kanishka Narayan said Fractile had confirmed £100 million of new investment in its UK headquarters over the next three years. The investment was intended to expand its London and Bristol sites, create a UK industrial hardware engineering facility and grow its UK-based team.
Business Secretary Jonathan Reynolds said in the funding announcement that Fractile planned to expand its presence in Bristol. He linked the company’s plans to the government’s reindustrialisation agenda.
The government said the investment followed a Budget commitment of a further £140 million for Sovereign AI. That comprises an additional £60 million for the fund’s investments and £80 million for its research and development procurement scheme. The chancellor also announced that Sovereign AI would expand its focus to physical and industrial AI.
An AI hardware plan published in June set out over £1.1 billion of targeted public and private investment. It included a deeptech hardware venture fund led by Playground Global, backed by up to £150 million from the British Business Bank. The plan also listed a £750 million heterogeneous AI supercomputer for the AI Research Resource, intended to bring different computing technologies into a single system for research workloads.