In 2014, a trend began to emerge in London: Google purchased AI company DeepMind for a reported £400 million, and just a year later, a London-based company that applies machine learning to healthcare research, BenevolentAI, became the UK’s third-ever startup to reach unicorn status, a term that denotes a startup that hits $1 billion valuation.
What’s more, BenevolentAI managed that feat in just two years after it was founded; its two unicorn predecessors, JustEat and Zoopla, took nine and seven years, respectively. Since 2015, the only other company to come close to that speed to unicorn status was Graphcore—another AI startup.
Since 2014, AI startups have flourished in London. AI venture-capital firm Asgard estimates that London has three times as many AI companies than any other European city, and City.AI reports that an AI startup was created almost weekly in London just two years ago—and that rate is almost certainly higher at this point.
It’s clear that artificial intelligence is, quite literally, big business in the UK right now. And since AI technologies cut across many different industries, London has become the ideal market for any company that wants to tap AI talent or launch a new AI concept.
The government is betting big on AI in London
In a 2018 report commissioned by the mayor of London last year, AI advice platform CognitionX estimated that there were 645 AI companies with a London headquarters—double that of Paris and Berlin combined, with the majority of businesses being small- and medium-sized businesses. In 2017, investment in London AI firms stood at £200 million, an increase of 50 percent from the year before.
A major factor in London’s success with AI is the city’s commitment to supporting the industry. London Mayor Sadiq Khan has called it his goal “to ensure both that London is at the forefront of developing and capitalizing on these new technologies, and that all Londoners can benefit from the opportunities they will create.”
Khan’s position is backed up by the wider UK government, which, in May of last year, committed £950 million to the market in its AI Sector Deal. The deal pledged to raise investment in AI R&D to 2.4 percent of GDP by 2027, increase AI R&D tax credit to 12 percent, and invest hundreds of millions in programs that directly stimulate the AI sector’s growth.
In the year since, the government has set up an AI Council and the Office for Artificial Intelligence, both aiming to cement the UK as a world leader in the AI business and ensure that the AI Sector Deal comes to fruition.
AI companies are a game changer across industries
The key to the AI sector’s huge growth—and its value to investors—is that it cuts through traditional industries, disrupting and aiding more recognizable business types. AI is actively being employed in several sectors, including academia, creative industries, healthcare, and manufacturing.
Some AI startups work directly to benefit existing businesses—Pointr, for example, is a “Deep Location” company that offers AI-assisted navigation tools to the likes of airports and department stores. Other startups aim to directly aid the consumer, disrupting industries that have previously operated under strict guidelines and rules. One such company is JukeDeck, which uses AI to create original, royalty-free music for professionals and amateurs alike.
The potential for application in almost any industry makes AI a fertile space for business growth. In fact, a McKinsey & Company report in 2018 estimated that AI business could contribute $13 trillion to the global economy by 2030, with 70 percent of businesses employing some form of AI process by that time.
All of this makes a London base an obvious boon for an AI startup—the capital is the UK’s home base for most major industries, meaning AI businesses offering complimentary services have easy access to potential buyers and investors alike.
London has a thriving AI talent pool
London is also likely to become a hotbed of AI expertise. Thirteen universities in the capital already offer AI-related undergraduate and postgraduate degrees, and the government has this year created an AI skills and talent package, adding 16 new centers for doctoral research (many of which will be in London) to offer 1,000 sector-related Ph.D.’s in the next five years. Up to 200 new industry-funded AI master’s courses have also been announced to create AI experts while the new Turing AI Fellowship program has been designed to retain the top AI talent in the UK.
AI startups need to be flexible and agile
With its mix of opportunity, investment, and talent, London is a perfect location for AI startups to launch or expand. And companies within industries experiencing rapid growth often need a real estate solution that can grow with them. That’s why startups are increasingly exploring collaborative workspaces, which offer a flexible working environment without being tied down to a traditional commercial lease.
WeWork offers multiple collaborative workspaces in London’s most desirable neighborhoods, perfect for fast-growing startups that need a flexible and affordable office solution, or established companies looking to expand into the AI market. The lack of long-term leases means that companies can grow and decrease their overhead costs as the company changes, and the stylish spaces offer an impressive background for meetings with investors and potential clients.
WeWork Labs also acts as an incubator for early-stage startups, offering budding AI entrepreneurs access to thoughtfully designed workspaces and meaningful connections with the educational and financial resources needed to drive their businesses forward.
Whether you’re part of a startup looking to disrupt an industry or an established company looking to integrate AI technologies, London has become a powerhouse market for AI business and talent.
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