Remarkably, in 2023, London, despite hosting over half of the UK's AI startups, ranked only fourth in average funding.

For instance, South West England achieved $17.6 million per startup, more than triple that of North West England. Scotland, with $9.0 million per startup, nearly doubled the North West's figures. Interestingly, 2022 was the first year when London-based AI startups outpaced their non-London counterparts in average funding, securing $11.3 million compared to $9.5 million.

O3 utilises a unique taxonomy combining traditional data and in-depth analysis of a company's tech stack and go-to-market strategy. This platform blends research from Oxford Saïd, initiated in 2019, with OpenOcean's 13 years of experience in investing and nurturing pioneering European startups. The data spans from Q2 2012 to Q2 2023.

Following London, the South East, and Eastern regions, North West England stood out with 66 AI companies, securing over $326 million in 2023. Over the past decade, the North of England's AI startup ecosystem has flourished. In 2013, total funding in the region was $9 million, soaring to $568 million by 2023, highlighting the substantial 'AI boom' beyond London and the South East.

Other key findings from the O3 platform include:

• As of 2023, the cumulative total funding raised by AI startups in the UK was $15.2 billion, with London accounting for 61% of this figure.
• The top regions for average funding per AI startup in 2023 were South West England ($17.6 million), Eastern England ($15.5 million), South East England ($14.7 million), and London ($12.8 million).
• The top cities for average funding per AI startup in 2023 were Bristol ($55.0 million), Oxford ($44.2 million), Cambridge ($13.4 million), and London.
• The pandemic had a significant impact on the growth of AI startup funding both in London and outside the capital. The annual growth rates dropped from an average of 74% and 51% pre-pandemic (2018-2020) to 40% in London and 30% outside during the pandemic and post-pandemic period (2021-2023).

Given the $15.2 billion in funding secured by AI startups since 2012, the AI hype continues to build as founders seek to capture a part of this growing market. An increasing number of startups are eager to join the ‘hype’ and capitalise on the technology's promise, with the number of AI startups increasing by more than 8 times since 2012.

In accordance with the number of startups attempting to join this wave of investment, OpenOcean’s internal data showed that the mention of AI technologies in startup pitches has increased significantly, from 10% in 2022 to 27% in 2023. By 2024, OpenOcean expects over one-third of startups to reference AI in their investor pitches.

Ekaterina Almasque, General Partner at OpenOcean, said: “We're thrilled to see the O3 platform continue to provide unparalleled open-source access into the UK's AI startup ecosystem. This latest data analysis not only highlights London's impressive funding total, but also underscores the pressing need for increased support and investment across all regions. The surge in AI-related pitches shown by our internal data highlights the growing awareness and enthusiasm among startups, as well as the increasing pressure to showcase AI capabilities to attract investors in a competitive funding landscape.

“While London's success is a testament to the UK's potential, we must recognise that continuing to foster growth and innovation throughout the country is essential to maintain our competitive edge. Other nations are already investing heavily in nurturing the next generation of AI leaders, and the UK cannot afford to be left behind. The O3 platform's insights provide a roadmap for targeted investment and support that will create a more balanced and thriving AI ecosystem across the UK. By working together and strategically investing in AI development in all regions, we can unlock the UK's full potential and cement our position as a global leader in AI.

“It is crucial that policymakers and industry leaders prioritise the development of a comprehensive AI strategy that ensures the UK remains at the forefront of this technological revolution. The decisions we make now will shape our future success in the AI-driven world, and secure our place as a pioneer in this field.”