Attracting investment is fundamental to drive growth in the AI sector, unlocking new capital sources like pension funds and fostering a strong investment ecosystem, while addressing challenges like international competition and recognising the impact of taxation.

Economic growth relies upon attracting investment. Stimulating growth in the AI sector will require further investment, not only in the technology companies but in both the social and economic infrastructure to support these companies. Government can play a role in highlighting the investment opportunities and attracting external investors, as well as creating an environment that supports those investments. Investors are looking for economic stability as well as physical and social infrastructure, which will make their investments successful.

High growth technology companies rely upon growth capital to scale and compete internationally. US companies have access to much larger pools of investment, giving those companies significant advantages. The Government can incentivise investment in high growth companies in a number of ways. The SEIS and EIS tax schemes provided powerful incentives for small investors to invest their capital in early stage businesses. Further incentives of this sort should be encouraged, that draw further investment into the sector. At the institutional level, the UK lags far behind other countries when it comes to investment from pension funds in early stage startups. Unlocking access to pension funds investment could bring huge additional investment into the UK, driving economic growth and social progress. Linking pensions to technology in this way, brings society together in one shared interest.

Government has an important role to play in securing and directing existing innovation funding and tax credits for research and development, ensuring that this is focused as efficiently as possible on the areas that need it most. Government can also champion innovative solutions and encourage their use within the public sector to increase productivity and improve outcomes. This can be done through continued work to make Government procurement more open and increased focus on ‘Government as a Customer’.

Any discussion of investment must also consider the impact of changes to the UK tax structure, where significant increases in tax can act as a major disincentive to additional investment. For example, increased UK taxes could influence founders looking to raise their next round to relocate to lower tax regions. Higher taxation can also deter potential senior hires from relocating to the UK, where they could be charged increased capital gains taxes on their stock in the event of an exit.

In addition to raising these areas for discussion, UKAI is also building an ecosystem to bring together high growth businesses with significant global potential with investors. We aim to showcase best practice and share case studies of successful UK AI businesses.