Influx in Capital Investment in the UK's AI Sector
Recently there has been a surge in investment in the UK’s AI sector with the first 2 quarters of 2019 raising more investment than the whole of 2018. As venture capitalists have invested over $1.62 billion (£1.31 billion) in UK AI firms only including up to June of this year; setting the precedent for a record year for AI investment according to industry body Tech Nation.
For the last four years, AI funding has consistently grown placing the UK third globally behind China and the US in terms of AI presence. Comparing data, the US has invested $9.6 billion into its AI sector so far in 2019 by contrast China is yet to overcome its 2018 total – backing $3.5 billion so far this year compared to its $6.9 billion spending last year.
Another key difference between the top three is the structure of the firms in their respective industries. For example in the UK, 88% of firms are startups employing less than fifty people. By contrast, China has just over a third as many firms but most of these firms (54%) employ over 50 workers.
However, there are rising fears that the UK may not be able to maintain its dominant position globally in AI. One of the key reasons is the fear of a substantial skills shortage in the future in the UK. Partly caused by the brain drain as Silicon Valley firms raid top universities for talent. A possible solution would be to increase incentives for skilled workers to remain in the UK such as raising wages. Alternatively, the UK could review its immigration policy, loosening it to attract more skilled labour.
The UK has already responded to these fears by injecting a £300 million investment to make the UK a research "hotspot“. Research has found that in the long run, this could boost the economy by £230 billion leading to an over 700% return on investment.
To conclude the UK is experiencing a rapid influx of investment sector but this will only be sustained if the UK government supplements the development of AI with the skilled labour that is necessary.