UK Sovereign AI Fund reportedly joins Fractile's $6.5 billion chip funding round

The UK government's Sovereign AI Fund has joined a large funding round for Fractile, a London startup designing chips for running AI models, according to a report by The Telegraph on November 1 that was relayed by Dealroom and Telecompaper. The round has not been officially announced. Fractile and the government declined to comment, and the deal could be made public as early as this week.

What has been reported

Fractile is expected to raise around $700 million at a valuation of about $6.5 billion, up from roughly $1 billion earlier this year, according to the reports. Lightspeed and Redpoint are said to lead the round, with Thrive Capital also investing. Dealroom notes that Companies House filings show about £577 million of new Series C shares issued in three tranches between September 9 and October 23, at different share prices. It is not clear whether these filings and the reported $700 million describe exactly the same money.

The size of the state fund's investment is uncertain. Telecompaper, citing The Telegraph, describes it as hundreds of millions of pounds, while Dealroom says the stake has not been disclosed and that the fund typically writes cheques of £1 million to £10 million. Dealroom also reports that the fund came in at a slightly lower valuation than the final figure. The Sovereign AI Fund was set up this year with £500 million of public money.

The company and its Anthropic deal

Fractile was founded in 2022 by Oxford robotics researcher Walter Goodwin. Its chips target AI inference, the work of generating answers from trained models, and place memory directly next to the processing units, an approach that differs from the GPUs sold by market leader Nvidia. In May it closed a $220 million round led by Founders Fund, Accel and Factorial Funds.

The current talks first surfaced in August, when Bloomberg reported that Fractile was seeking a $6.5 billion valuation. At that time, reports said the company had reached an initial agreement to supply Anthropic with about $250 million of its chips, which are not expected to be in use before 2027.

Open questions

The valuation has risen about sixfold within months, and Fractile has not yet shipped chips in volume, as Dealroom points out. Public money in such a round also exposes taxpayers to the risks of an early-stage hardware company. Until Fractile or the government confirms the terms, the final amount, the investor list and the fund's stake should be treated as reported rather than official.