The UK's taxpayer-backed Sovereign AI Fund has taken part in Fractile's latest funding round, which values the London AI chip developer at about $6.5bn (£4.8bn), according to a report in The Telegraph. The fund is understood to have come in at a slightly lower price than the headline valuation.
Fractile was founded in 2022 by Walter Goodwin, who completed a PhD in robotics at the University of Oxford. The company designs processors for AI inference, the stage where a trained model produces answers, and places memory inside the chip to cut the time and energy spent moving data.
According to the report, which cited people familiar with the deal, the round totals about $700m and is being led by Silicon Valley firms Lightspeed and Redpoint, with Thrive Capital also taking part. Founders Fund backed the company in an earlier round. An announcement could come as soon as next week. Fractile has not publicly confirmed the raise.
The size of the Sovereign AI Fund's cheque was not disclosed. The fund usually invests between £1m and £10m per deal, so its stake is likely to be small next to the US-led syndicate. Its presence is still significant: it puts public money on the cap table of one of the UK's most highly valued hardware start-ups.
The Sovereign AI Fund was set up earlier this year with £500m of public money to back British AI companies. Last week's Budget added £60m for direct equity investments and widened its remit to robotics. Fractile joins a portfolio that already includes Olix, Callosum and Basecamp Research.
Companies House filings, reported by The Cap Table on 30 October, give a sense of how the round has been priced. Fractile has issued £577.4m of Series C preferred shares since September across three classes. The top class, C-3, was priced at £1,452.35 a share, 5.2 times the £278.37 paid for Series B-1 shares in May. Two smaller classes, C-1 and C-2, were issued at £801.54 and £707.25 a share.
The filings do not name the investors behind each class. A lower entry price for the government fund would be consistent with a tiered structure, but which class it bought into has not been disclosed.
The jump in value has been steep. Fractile was valued at about $1bn earlier this year, according to the report. Since then it has signed a $250m chip supply contract with a US AI developer, which has helped draw larger investors into the business.
The new capital will fund the move from chip design to volume supply, which means more spending on engineering, testing and manufacturing partners. Fractile runs hardware teams in London and Bristol.
For the Sovereign AI Fund, the deal is its largest-profile bet yet on home-grown AI hardware. It also raises a question that will follow the fund into future rounds: whether small public cheques can secure meaningful influence in companies whose valuations are being set by US investors.
Original source: The Telegraph — https://www.telegraph.co.uk/business/2026/11/01/labour-ai-fund-joins-deal-for-anthropic-backed-chipmaker/
