UK Chip Startup Fractile Targets £160m Raise to Take on Nvidia

TL;DR: London-based Fractile is negotiating a £160 million ($200m) funding round at an £800 million ($1bn) valuation, backed by venture capital firm Accel. The startup uses SRAM-based chip architecture to deliver faster, cheaper AI inference — joining a growing cohort of British semiconductor firms positioning against Nvidia’s dominance.

Fractile, founded in 2022 and headquartered in London, is the latest British chip company to attract significant investor interest as the AI hardware market heats up. The startup counts former Intel chief executive Pat Gelsinger and NATO’s Innovation Fund among its backers, and is now in discussions with Accel and existing investor Oxford Science Enterprises for its latest round.

A British Semiconductor Wave

The fundraise follows a pattern of ambitious UK chip ventures. Just last month, 25-year-old British entrepreneur James Dacombe raised £175 million ($220m) for his AI chip startup Olix. Both companies share a common technical approach: using static random access memory (SRAM) rather than the traditional GPU architecture that underpins Nvidia’s product line.

This SRAM-based design targets AI inference — the process of running trained models in production — where Nvidia’s £3.4 trillion ($4.3tn) empire faces growing questions about efficiency. Nvidia itself acknowledged this shift by launching a dedicated inference chip this month, following its £16 billion ($20bn) acquisition of AI chip firm Groq in December.

Sovereign AI and UK Expansion

Fractile is also tapping into government demand for domestically produced AI capabilities. Last month, the company announced plans to invest £100 million over three years to expand operations in London and Bristol, including a new hardware engineering facility.

However, the UK chip sector carries cautionary tales. Graphcore, once a flagship British AI chip company, was acquired by SoftBank in 2024 for just over £475 million ($600m) — less than its total venture capital funding. Fractile’s team includes several former Graphcore engineers alongside veterans from Nvidia and Imagination Technologies.

Looking Forward

Led by CEO Walter Goodwin, an Oxford PhD graduate, Fractile has raised approximately £12 million ($15m) in seed financing to date. If the current round closes as reported, it would represent a significant step up and further establish the UK as a credible hub for AI chip development — provided these ventures can avoid the commercial struggles that plagued their predecessors.