UK Chip Startup Fractile Hits $7 Billion Valuation

British artificial intelligence chip startup Fractile has raised US$720 million in a Series C funding round that values the company at US$7 billion, with backing from the British government, Reuters reported on Wednesday (Nov 11), citing a person involved in the deal.

The valuation makes the London- and Bristol-based firm one of Britain’s most valuable technology startups, according to Reuters. The Financial Times also reported the US$7 billion figure, while the British government put the round at over £500 million and the valuation at over £5 billion.

Who is backing Fractile

Fractile told Reuters the round was led by Thrive Capital, Founders Fund, Lightspeed and Redpoint.

Other investors included Google’s venture arm CapitalG, BlackRock, DST Global, Elad Gil, Balderton, SV Angel, Britain’s Sovereign AI fund and the British Business Bank.

The FT reported that the new valuation compares with roughly US$1.1 billion in a funding round in May, citing people familiar with the matter. The newspaper also said Anthropic had shown interest in becoming an early customer for Fractile’s chips, though neither side has announced a firm order.

Chips for AI inference

Fractile is developing chips designed to improve AI inference, the process through which AI models produce responses. The company says its technology can deliver faster performance while cutting energy use and costs.

Reuters said the deal points to growing investor interest in firms building the hardware behind AI, a market dominated by Nvidia and a handful of Asian semiconductor manufacturers.

Britain’s AI Minister Kanishka Narayan said in a statement that the country has too often seen the technology, industry and wealth from its scientific ideas built elsewhere. “We are determined to change that,” he said.

What’s next

Fractile plans to launch its first commercial chip next year, according to Reuters.

Chief executive Walter Goodwin wrote on LinkedIn that “there is still a lot of work ahead,” and that the funding will allow the company to ship its first chips and systems next year, TechCrunch reported.

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