AI hardware startup Fractile has secured backing in a Series C funding round worth more than £500m, valuing the company above £5bn. The round is backed by the UK Government's Sovereign AI Venture Fund and the British Business Bank, alongside investors including CapitalG, Lightspeed and Redpoint.

Fractile is based across London and Bristol and is developing advanced chips—the physical hardware that powers artificial intelligence.

What Fractile Does

Fractile is re-inventing the hardware that AI runs on, so that it is faster, more energy efficient, and less costly. The company's focus is on the physical chips—the foundational layer of computing infrastructure—rather than the software algorithms or models that typically dominate AI headlines.

Government and Institutional Backing

The Sovereign AI Venture Fund and the British Business Bank have both backed Fractile's round.

Kanishka Narayan, AI Minister, said: "For too long, Britain has produced some of the world's best scientific ideas, only to see too much of the technology, industry and wealth they create built elsewhere. We are determined to change that. If AI is going to serve the British people, strengthen our public services and create good jobs across the country, Britain needs to build more of the technology that powers it."

Narayan added: "Fractile represents the very best of British ambition, bringing together world-class chip design, engineering and AI expertise to develop faster, cheaper and more energy-efficient hardware. By backing brilliant British companies like Fractile, we're making sure Britain has the industrial strength and sovereign capability to shape the future of AI, with the jobs and economic rewards coming home to communities across our country."

Jonathan Reynolds, Business Secretary, stated: "Fractile is a fantastic British success story. This fundraising news, backed by the British Business Bank and Sovereign AI, will boost our ability to make the chips and cutting-edge tech powering AI here at home. With plans to expand their presence in Bristol, Fractile are helping to put our plans for reindustrialisation into action—delivering the good jobs and growth that will benefit communities across the country and drive our economy forward."

Investment Rationale

Josephine Kant, Sovereign AI investment partner, said: "Walter and the team at Fractile are taking on an ambitious challenge, with the potential to make a significant contribution to the global future of AI hardware. Their approach brings together deep expertise across chip design, software, and machine learning, and we believe it has the potential to compete with the very best globally."

Leandros Kalisperas, chief investment officer of the British Business Bank, commented: "Fractile is pushing the frontier of AI forward by rearchitecting the hardware stack. Walter and his team are building chips designed to work faster and at greater capacity, allowing AI to reach new potential, scaling faster and more cost effectively. This is British innovation at its best—exceptional technical minds focused on building technology that can compete and win on a global stage. We're proud to be backing them at this critical stage of growth."