Technology secretary Liz Kendall. Photo by Lauren Hurley / No 10 Downing Street via Flickr
The UK government has announced the first early-stage British AI companies that are to receive investment through its new UK Sovereign AI fund.
The £500m (US$675m) fund, part of the government’s AI Opportunities Action Plan, was launched last month to boost home-grown innovation and support national security.
The companies to be backed by UK Sovereign AI are Ineffable Intelligence, which is developing a new generation of learning algorithms – with British Business Bank as co-investor – medicine design and development company, Isomorphic Labs, and ‘intelligent systems’ company Callosum.
Ineffable Intelligence is building algorithms that can uncover new knowledge rather than copying what humans already know.
Liz Kendall, the UK’s science and technology minister, said that government viewed the firm as working “at the very frontier of AI”, and whose impact could “transform entire sectors”, while Kanishka Naraya, the UK’s AI minister, praised the company for taking what he described as “one of the world’s most innovative approaches to frontier AI”.
Isomorphic Labs is expected to use its funding to scale up its mission of countering serious global diseases.
Kendall said Isomorphic Labs’ “ground-breaking work has the potential to reshape completely how medicines are discovered – cutting years off development and giving real hope to people living with devastating diseases”.
Callosum, which was the fund’s first investment, is building systems that can run AI programmes on “fragmented, heterogeneous, and increasingly complex” infrastructure though a platform that orchestrates different chip architectures in real time.
Read more: Governments of UK and Canada announce plans to secure AI sovereignty
A ‘bet on Britain’
UK Sovereign AI was launched on 16 April. According to the government’s announcement, as well as investing in British AI firms, it will provide them with access to the UK’s largest supercomputers, research support, procurement opportunities, independent product validation, and the chance to shape regulation.
The government will help UK AI companies to attract “the world’s top R&D talent” by offering visa decisions within one working day, and up to 10 free visas for skilled individuals looking to work in the UK. It will also cover the legal fees for startups seeking to become UK Limited Companies.
Kendall described the fund as “one of the most important things this government does to build a better future for our country”, and as the government’s “bet on Britain”, adding that it represented a belief in the country’s “entrepreneurs and innovators… to seize the benefits of AI for the UK”.
Naraya added: “We are together showing what British AI can be: the best talent, backed by exceptional state capacity, building AI in Britain, changing the world with it.”
Read more: UK government to launch AI research lab to support ‘bold, high-risk’ innovation
Making it easier for startups to sell to government
The Department for Science, Innovation and Technology (DSIT) is consulting on sovereign AI R&D procurement, as part of the fund’s remit.
It published a preliminary market engagement notice last month in which it said its aim is to “build government procurement into our offer to support AI startups”, and that by “acting as an early customer, government can help to validate novel AI capabilities and de-risk investment for the wider market”.
It added that government wants to “design our procurement in a way that supports high-potential AI startups that are developing sovereign AI capabilities”, and that it “know[s] the difference government contracts can make for startups by providing revenue, credibility, and leveraging private investment”.
It invited companies whose work aligns with sovereign AI focus areas to submit information by 16 May, and said in the engagement notice that it is considering a competitive scheme where companies can apply to win government contracts to develop sovereign AI capabilities and address public-interest challenges.
These contracts would be worth up to £5m (US$6.6m) per project, with a duration of 12 to 24 months depending on the scope of the project. The total value of contracts is £96m (US$128m), and contracts will run from an estimated date of 3 July 2026 to March 2030.
DSIT added that selected companies would “retain ownership of all background IP and foreground IP created during the project” and would be “free to exploit the IP commercially or sell it to other customers”. The government is expected to retain usage rights to the foreground IP developed, to ensure “adherence to procurement law and knowledge retention”.
In a post on X on 14 May, Narayan said the consultation on its “fast R&D procurement set up” was created to move “at the pace of the fastest customer in validating the best of British AI”.
Over the last few months, AI founders have flagged to me the challenge of procurement: that it’s still too hard for British startups to sell to government.
Two practical pieces of progress to report back! 🚀
1/ UK AI leader, @quantexa, has today been awarded a major £175m… pic.twitter.com/QtH0Wedoio
— Kanishka Narayan MP (@KanishkaNarayan) May 14, 2026