AI chip startup Fractile hits $7 billion valuation in funding round

British AI chip startup Fractile has raised $720 million in its latest funding round, bringing its value to $7 billion. The UK government also supported the deal, a person involved told Reuters. Fractile, which is based in London and Bristol, is now one of Britain’s most valuable tech startups.

Thrive Capital, Founders Fund, Lightspeed and Redpoint led the funding round, Reuters reported. Other investors included Google’s investment arm CapitalG, BlackRock, DST Global, Elad Gil, Balderton and SV Angel.

Fractile also received investment from the UK government via its Sovereign AI fund and the British Business Bank. This gives the government a share in the company.

Fractile’s product category

Fractile makes chips designed to help AI models answer questions and complete tasks after training. The company claims its chips can make AI run faster generally while using less energy and costing less, according to Reuters.

Running AI models is expensive because every request uses computing power. The smallest of savings can make a big difference when millions of people employ these systems.

Nvidia and a few big Asian chipmakers supply most of the chips used for AI. Fractile hopes to compete with these companies, and its large funding round shows that investors are willing to back other chip companies.

UK government furthers investments

The UK wants to become a world leader in AI and use the technology to grow its economy. Britain is already well known for its research and chip design. By investing in companies like Fractile, the government hopes to create more jobs and keep more of the money made from AI in the country.

AI Minister Kanishka Narayan stated that the funding was all a part of its effort towards those objectives. Narayan said Britain has long produced some of the world’s best scientific ideas, but much of the technology, business and wealth that comes from them has ended up in other countries. He added that the government was determined to change that, Reuters reported.

Britain is home to Arm, which designs chips used in billions of devices worldwide. However, the country has few chip factories, which is one reason the government wants to invest more in British chip companies.