The UK government's £500m Sovereign AI Fund is negotiating an investment in drug discovery startup Potential Sciences, in a round Sifted reported at £500m. Neither side would discuss terms, and the fund's head of ventures, Joséphine Kant, is reported to be joining the company as part of the deal.
The Sovereign AI Fund was set up by the UK government with £500m to take equity positions in British AI companies, alongside compute allocations for firms that do not receive a cheque. It has deliberately positioned itself as a direct investor rather than a grant-maker, with Kant telling Sifted earlier this year that the unit "should be just as fast as a private VC".
That mandate is now being tested at the top end of the market. Sifted reported on Friday that the fund is in talks to participate in a raise for Potential Sciences, a drug discovery business, and put the size of the round at £500m — a figure equal to the fund's entire committed capital, which implies a minority cheque alongside private capital rather than a solo position.
No valuation, round stage, lead investor or co-investor list has been disclosed. The government declined to comment on the negotiations and Potential Sciences did not respond to requests for comment, so the round should be treated as unconfirmed until terms are filed. Terms were not disclosed.
The governance detail is the more unusual part of the deal as reported. Kant, who has led ventures at the Sovereign AI Unit since its launch, is slated to move to Potential Sciences as part of the transaction. A state investor's investment lead crossing to the investee company is rare in UK venture and raises questions the fund will be asked to answer on conflict management, cheque sizing and who signs off the final terms.
The fund's disclosed positions give some sense of appetite. It has taken equity in Isomorphic Labs, the drug design company founded by the Nobel laureate Sir Demis Hassabis, and it sat alongside Atomico in Callosum's £100m seed in August. It has consistently declined to give cheque sizes, citing commercial sensitivity — the same position it has taken on Potential Sciences.
Life sciences AI is where the largest UK cheques have been landing. Tracxn data compiled for the first half of 2026 put UK AI funding at $9.6bn, up 360% year on year across 69 rounds, with life sciences technology accounting for $2.1bn and the five largest companies taking 84% of the total. Isomorphic Labs alone raised a $2.1bn Series B in that period.
A £500m round for Potential Sciences would sit in that top tier. What matters for the cap table is how much of it the state takes, at what price, and on what rights.
Original source: Sifted — https://sifted.eu/articles/uk-sovereign-ai-fund-in-talks-to-back-500m-raise-for-drug-discovery-startup/
