buying-ai
Business Management

Why is the UK such a centre for AI innovation?

At the start of February the story that Microsoft has bought up UK AI startup SwiftKey for $250m was big news. This is a company which provides a predictive smartphone keyboard powered by AI. And with hundreds of millions of worldwide users, it arguably knows as much about consumer preferences, as search giant Google. It also boasts extensive expertise across the spectrum of Artificial Intelligence. Hence the acquisition.  

Yet SwiftKey is just the latest UK AI company to be purchased by a big US organisation. Most notably these have included Google’s acquisition of DeepMind in 2014 and Apple’s highly publicised buy-out of speech startup, VocalIQ, last year.

But why is this? After all, much as I’m proud to be British – and we certainly have a very well-publicised history – you don’t see many Googles or Facebooks coming out of This Sceptred Isle…

 

Why does so much AI expertise seem to come from the UK?

Chris Wade, a partner at Isomer Capital an investment fund targeting European technology-based businesses argues succinctly that we have, according to the Times Higher Education Review “two of the five top universities in the world”. This means that as so many of our founders come from technically skilled backgrounds “the UK [has become] an attractive place for other technologists to come and join growing startups”. This in turn drives more capital.

However, Ilya Kazi, a Partner with patent attorneys Mathys & Squire who used to live in Silicon Valley and is now in London, points out none of this is unique:

“We are fortunate to have some very good academic centres, particularly Cambridge, Oxford and Imperial – although the founder of DeepMind dropped out of Oxford – but then Stanford and MIT are also excellent so that clearly isn't the whole story,” she says.

Next she highlights the entrepreneur community in various parts of the UK, but adds: “Again the US has great communities around Palo Alto where people do genuinely pitch ideas in coffee shops and so again that can't be the complete answer.”

There are tax incentives, she says, – such as EIS/SEIS and patent box – that have helped push a focus on innovation and make UK startups more attractive for investment. “But that again is not the whole story.”  

“London is, despite transport issues and housing prices, an attractive city but that does not necessarily apply to early stage startups,” she adds. 

“I think the reality is that ‘so much seems to come from the UK’ because we have in the last few years finally jumped up a gear [and] started to punch our weight,” suggests Kazi. “But when I was in Silicon Valley a few weeks ago I don't think by any means innovation has stopped there or elsewhere and it would be mistaken to sit back complacently and think the UK is now forging ahead.”

Of course, the UK can argue for a history in AI. “Alan Turing first wondered if it would be possible for machines to mimic human behaviour and wrote a test to that effect in 1950 [PDF], says Kester Ford, Director of Product Marketing at DataSift. “That programme, whilst not intended at the time, has formed the basis for bots that sit in programmes like Slack. So you could say that AI is in our heritage.”

However, he warns that this aside: “We also need to learn a few lessons from our US cousins. They understand the power and potential of a brand, whereas us Brits, focus on the tech. For the next big thing in AI to come from the UK we’ve got to combine brand savvy with tech know how.”

This point is seconded by James Hall, Managing Director of Genfour: “As often seems to be the case, British innovation with AI finds a home in the US where the cultural propensity to back an idea and the deep pockets and expertise of Silicon Valley prove irresistible to those wanting to move their idea forward, and to realise a large sum of money whilst doing so.”


As AI becomes increasingly important, is this UK lead likely to continue?

It is a hard to predict the future but Kazi from Mathys & Squire believes the UK is likely to continue as a lead in the field of Artificial Intelligence. “But only if we continue to provide further encouragement and a stable climate to encourage entrepreneurs to settle and people to invest.”

Wade of Isomer Capital adds: “Luckily for the UK, its technical talent pool continues to proliferate in the form of brilliant young technologists creating exceptional companies with huge growth potential.

“While we don't yet have the global tech behemoths like Google and Facebook, I expect this to change sooner rather than later. We are also seeing that UK universities are getting better at fostering technical entrepreneurs. Top universities such as; Imperial, UCL and Warwick to name a few, all support internal entrepreneurs and have investment funds and accelerators set aside to help create home-grown AI and robotics innovations.”

 

And what are the wider implications of this?

Wade believes that the main upshot of all this expertise will be that many of the deep-tech startups coming out of the UK will choose to remain in the country, even if they are bought out by a big US firm.

“This is because it is now recognised that the success of an entrepreneurial businesses is down to the team. The unique culture each team creates is hugely powerful in its ability to retain top talent as well as maintain the level of creativity that made it successful in the first place. In fact, if you look at almost all recent major tech acquisitions of European teams by US companies, they have all resulted in the vast majority of the teams staying in the European location,” he says.

While Kazi concludes: “We should learn from the positives that as a country we can still innovate and be among the leaders in new technology but we should see that we a need the right combination of education, infrastructure and incentives to foster this.”

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