Generative AI is the new entrepreneurial frontier. Not only is content-generating artificial intelligence the fastest-growing technology of our time, with potential to transform every sector of industry, but it’s also the most talked-about and disruptive new tech since the dawn of the internet. Among investors, everyone wants a piece.

Today’s start-ups are already embracing generative AI in their workflows, and they understand the value of tools like ChatGPT, Bard and Llama for boosting productivity. Indeed, IT that doesn’t deploy generative AI may soon be in the minority. In its May 2023 Data and Analytics Predictions, Gartner predicted that, “By 2027, generative design AI tools will automate 70% of the design effort for new web and mobile apps.”

But while investors are keen for start-ups to deploy generative AI, the new businesses that are really creating excitement in the investor community are the ones developing their own large language models and generative AI products, harnessing the power of today’s ultra-efficient, high-performance data centres to do so.

Investor enthusiasm for generative AI has helped the UK to surge into position as Europe’s AI leader. Europe’s best-funded start-ups of 2023 include Bristol-based Graphcore (which boasts $682 million funding) and London-based Builder.ai ($445m), both of whom develop generative AI models for other organisations to use. Additionally, Oxford-based and world-renowned Exscientia ($374m) is today using generative AI to discover and develop medicine.

A July 2023 study by VC firm Earlybird finds that the UK currently has 334 AI start-ups, with Germany (167) and France (135) some way behind. The success of home-grown AI has even helped push the UK to the top of the 2022 world rankings for private AI investment, beaten only by the US and China, which is a marked step towards the country’s ambitions of becoming an AI and supercomputing power.

The UK’s leading generative AI start-ups.

Some of the biggest start-ups that have helped the UK to achieve dominance in AI are well-recognised and easy to spot and their ground-breaking innovations have contributed billions to the UK economy. But there are many smaller firms following fast in their footsteps, using generative AI in truly ingenious ways, a subject I’m particularly passionate about at Kao Data.

Some of the key organisations to watch are listed below and are truly harnessing the technology to drive transformative change. London-based StabilityAI, for example, has created image generation tool Stable Diffusion, the closest the UK has to OpenAI’s DALL-E, and which promptly collected $101m in a single funding round in 2022. StabilityAI is keeping Stable Diffusion open source to ensure a wider market penetration and to let users both customise and improve it. The company has now signed deals with several major entertainment companies, including Bollywood studio Eros.

Another key GenAI start-up to watch is Summize, who are making contracts easier to understand. Business and legal contracts, for example, are not known for their ease of comprehension, and generative AI is tailor-made to help solve this challenge – or at least for those of us less-savvy with legal terminology. Summize combines human input and generative AI to produce intelligent contract summaries in lehmens terms, helping people to better understand the jargon, speeding up workflows and reducing risk for clients who including Vodafone, Fujifilm and Moonpig. With £1.5m funding to date, Summize is one of many start-ups to watch in Manchester – the UK’s new tech metropolis.

Security, insights and learning in the era of AI.

Netacea is another key Manchester start-up to watch, generating smart cybersecurity protection which help to reduce the impact of fraudulent activities. Today the company uses generative AI and machine learning to constantly improve its abilities to detect malicious threats, chiefly by learning to differentiate between bots and real humans – something vital in the era of fake news and social media misinformation.

From a content perspective, some of the best marketing campaigns and content has always been created using a combination of data and human ingenuity, and interestingly RedEye hasn’t changed that. Based a stones-throw from Greater Manchester in Crewe, the organisation’s AI driven marketing automation platform helps businesses to harness data-driven insights and quickly ramp up marketing conversion rates.

As we head southwards, Clever Lili is located in Brentwood, and not far from both the Innovation Corridor and our Harlow campus. The start-ups app helps students with ADD/ADHD, dyslexia and other neurodiverse conditions by making revision materials easier to follow and remember. The app has already become a firm favourite in the education industry, with support from UK exam boards including EdExcel.

AI for health and sustainability.

Following its acquisition by BioNTech this year, InstaDeep has continued to deliver world-leading technological breakthroughs and headlines, and is now using generative AI to develop new drugs and personalised cancer treatments. BioNtech’s new agreement with the UK Government, for example, aims to provide up to 10,000 patients with precision cancer immunotherapies by 2030.

Prime Minister Rishi Sunak said, “This landmark new agreement takes us one step closer to delivering life-saving new cancer treatments for thousands of patients right across the country. The UK is a global leader in life sciences – helping to create thousands of highly skilled jobs and pioneering research – and it is testament to this success that BioNTech have chosen to make this significant investment here today.”

Hosted at the Kao Data campus, InstaDeep has built a leading reputation among the big pharma community and it’s excellent to see the company using its technological prowess to solve one of the world’s key healthcare challenges.

In terms of global challenges, today sustainability is another critical problem and Chelmsford-based Infogrid aims to change the world through building intelligence. Its AI-powered platform gathers and analyses data from the IoT technologies to help make buildings healthier, more efficient and sustainable. The company recently raised $90m in funding and has won industry awards for its AI-controlled office condition automation platform.

How can the UK nurture generative AI?

Investment remains one of the key reasons for the UK’s success in generative AI. New start-ups are created, the technology is developed further, and existing start-ups and scale-ups utilise it to further innovate and develop their products, creating a virtuous circle of business and tech growth.

The UK government claims it is creating an investment-friendly environment, as outlined in its 10-year strategy to make the UK “the world’s best place to live and work with AI.” But if this is to succeed, consumer confidence has to be bolstered with appropriate regulation, especially amid a surge of negative tabloid headlines about the tech.

The government recently published a pro-innovation AI policy whitepaper that proposes a regulatory model designed to drive growth in the AI sector, with the aim of making the UK “a science and technology superpower by 2030,” and Generative AI is given due prominence in the paper, which cites the technology’s “enormous opportunities” but warns that transparency and accountability are essential.

I believe that next steps will need to include updates to intellectual property law and context-specific regulation for each industry, in addition to host of new investment in high performance infrastructure and connectivity. By doing so, strategies such as these will enable all sectors to embrace the opportunities of generative AI, rather than be frightened by the implications of an unregulated and wildly powerful new technology.