GLOBAL AI INVESTMENT: HOW DOES THE UK COMPARE?

Artificial intelligence (AI) has the potential to become one of the most transformative technologies, driving innovation across industries. With its ability to process vast amounts of data, improve efficiency, and generate predictive insights, AI is already at the heart of the global digital economy.

As AI continues to set business leaders’ agendas, it is increasingly attracting substantial global investment. The UK has positioned itself as a significant player in the AI investment landscape, ranking second globally in 2024 for the total number of AI funding rounds. However, despite this high ranking, the UK secured just 6.4% of total global AI funding, while the US dominated with a 45.5% share.

Ifty Nasir, founder and CEO of sharetech platform Vestd, explores global investment trends and the UK’s AI investment landscape, identifying some of the challenges AI startups and existing companies may face.

The UK’s AI Investment in a global context

In 2023, research forecasted that global AI investment would reach $200 billion by 2025, driven by increasing adoption across industries such as healthcare, finance and manufacturing. The projection highlights the accelerating demand for AI-driven automation and machine learning innovations in the last three years, with both private and public sectors investing heavily in the research and development of AI infrastructure worldwide.

The UK Government states that the UK is Europe’s leading tech ecosystem, with venture capital investment worth £860 million in 2023 to 2024. In addition, the UK startup ecosystem is the third most valuable in the world, with AI playing a crucial role in driving this growth.

This comes as recent data from Vestd’s Global Investment Report ranked the UK second for AI investments in 2024, with 365 funding rounds in total. However, despite the strong performance, the UK’s investment landscape has experienced significant fluctuations in recent years.

Between 2019 and 2022, there was an impressive 26.4% increase in funding rounds for AI startups, rising from 368 to 465. However, between 2022 and 2024 funding rounds declined by 21.5%, indicating a cooling period after the initial surge. This may reflect broader macroeconomic challenges and a slowdown in venture capital activity rather than a reduction in interest for AI.

The number of AI funding rounds has also dropped by 0.8% between 2019 and 2024, demonstrating that while the UK remains a leading hub for AI investment, momentum has somewhat slowed.

However, an influx of funding in 2025 may continue to strengthen the UK’s position as a global AI hub,

after the UK government revealed in January 2025 that an average of £200 million of private sector investment has been funnelled into the UK’s AI sector since summer 2024. The UK also hosts pioneering AI firms like Google DeepMind, ARM, and Wayve, reinforcing its global position.

In addition, the AI Opportunities Action Plan published in January has prompted more than £14 billion worth of investment into the UK and the creation of over 13,000 new jobs, as companies worldwide back the UK’s blueprint for AI innovation. This continued government support and investment in AI research indicates a commitment to sustaining the country’s position as a global AI leader.

AI investment by country

Vestd’s Global Investment Report further highlights trends and disparities in funding between major AI hubs since 2022. Whilst the UK ranked second for AI investments, with 365 funding rounds in 2024, this only represented 6.43% of total global funding rounds, falling far behind the market leader.

The US dominated AI investments, receiving 2,580 funding rounds in 2024 which approximately accounted for 45.5% of total global funding rounds. Notably, funding for US-based AI businesses has increased by 25.5% since 2019, reflecting a rapid expansion of AI within the country.

This growth has been driven by significant private-sector investments, government initiatives and the rising adoption of AI, positioning the US as the leading global hub for AI innovation.

This comes as President Trump announced a $500 billion investment in private sector AI infrastructure, as part of a joint venture called Stargate, involving OpenAI, Softbank and Oracle. Larry Ellison from Oracle stated that 10 data centres for the project are already under construction in Texas, with the President alleging it would create over 100,000 jobs.

In addition, recent reports show that US-based company OpenAI secured $6.6 billion in funding, while investors have poured a further $2.9 billion in Q3 of 2024 into the latest US-based AI startups.

Comparatively, AI investment in China and India accounted for 5.04% and 4.48% of total AI funding rounds respectively in 2024.

Earlier this year, Chinese AI startup DeepSeek caused debates over its remarkably low costs, while in turn raising ethical concerns about censorship and data collection practices. More recently, an article revealed that the release of the autonomous agent program, Manus, has the potential to shift investors’ attention, with some nicknaming it the second “Deepseek moment”.

The report’s data further revealed a significant 15.6% decline in the number of funding rounds in China, a trend that may reflect increasing caution among investors amid debates about Chinese AI firms such as DeepSeek.

Elsewhere, the BBC reports that India appears to have fallen behind in the race for AI supremacy, receiving less than half a percent of all AI patents globally between 2010 and 2022 and state funding only reaching $1 billion in total.

However, despite these challenges, Vestd’s data shows that India was the fourth leading country in AI funding rounds overall, experiencing a notable 24.5% growth from 2019. This surge is potentially driven by India’s rapidly expanding start-up ecosystem, which, as of 2025, has secured its position as the third-largest globally.

Challenges for businesses in the UK’s AI ecosystem

The UK’s AI ecosystem presents both exciting opportunities and significant challenges for startups and established companies alike. As the second-largest AI investment hub globally, the UK is nurturing an innovative AI environment. However, there are still critical hurdles that companies must overcome to ensure sustained growth and global competitiveness.

One of the most pressing issues facing both startups and larger companies in the UK is the shortage of skilled AI professionals. Whilst the AI Action Plan pledged to create over 13,000 jobs in the tech sector, companies are struggling to recruit due to a severe shortage of skilled workers. Research suggests a growing AI skills gap, with 34% of organisations struggling to attract the right talent.

This shortage is met by the growing demand for AI skills, with 82% of small businesses feeling

pressured to adopt emerging technologies. In response, 43% of UK business leaders are considering hiring international talent to fill these gaps in the UK’s talent pool.

This can be especially challenging in startups, where they may not be able to offer the same level of compensation or job security as larger companies. Startups which require highly specialised skills may find the skills gap holds back the growth and scaleup of their company, which due to the value of startups in the UK, could ultimately impact the continued success of the UK’s AI landscape.

To remain competitive and bridge the skills gap, startups can explore alternative talent acquisition strategies. One potential solution is offering equity-based compensation as an incentive for top AI talent. Many early-stage companies operate with limited cash flow, unable to offer lucrative benefits packages due to directing available funds into development and scaling efforts.

By offering options such as share schemes, growth shares or unapproved options, startups can attract skilled workers while preserving financial resources. Sharing equity not only develops a sense of security for employee retention, but also gives employees a heightened alignment with the goals and growth of the company.

The rapid evolution of AI technologies also creates a fast evolving regulatory landscape, as unlike the European Union’s AI Act, the UK is yet to implement such frameworks. While a more flexible regulatory approach could allow for greater innovation, a lack of clear guidelines also creates uncertainty, especially for startups with limited resources such as legal teams.

To navigate this evolving landscape, startups must prioritise responsible AI development and proactively implement ethical AI practices. While big businesses have the clout and money to invest in AI ethics departments and dedicated functions for AI responsibility, startups can’t always afford the privilege. This evolving regulatory landscape could have a significant impact on investments in AI startups and established companies as investors may be risk-averse and seek clarity and long-term growth potential.

Conclusion

As the second-largest hub for AI investments globally in 2024, the UK is fast-tracking its growth this year with the AI Opportunities Action Plan. While the UK continues to establish itself as a prominent force in the global AI investment landscape, it does however face several challenges that could impact its future ability to secure a larger share of global funding.

The talent shortage sees companies struggling to fill highly specialised AI roles. These skills gaps can be especially challenging for startups, which often cannot compete with the lucrative benefits packages offered by larger companies. Therefore, it is important for startups to find ways to attract and retain talent, such as offering equity-based compensation, which could be a crucial step forward in UK businesses maintaining future growth in the AI sector.

The UK’s AI ecosystem must also focus on strategies which address pressing issues, such as implementing effective talent acquisition and prioritising ethical AI development, in order to develop companies and attract further investor interest. The UK’s AI sector is demonstrating notable success with its position as a global leader, but by tackling the challenges it faces, it can ensure sustained growth in the future.