UK Trends and Developments Contributed by: Dylan Doran Kennett, Michael Jacobs, Stephen Newby and Mark Ife, Herbert Smith Freehills LLP
Looking Forward: Key Developments in the Short to Medium Term AI investment driving deals in 2024 While investors globally remained very cautious with their investments, conducting greater levels of due diligence than in recent years and focus - ing primarily on companies with very strong business strategies and paths to profitability, AI has been the exception. 2024 was a record-breaking year across the entire AI value chain. Investments into AI com - panies developing large language models were well publicised. The most prominent deal of the year was OpenAI’s USD6.6 billion funding round, which brought its valuation to USD157 billion. Total investment into AI companies develop - ing the tools and infrastructure for AI develop - ment (eg, data centres) was also significant. For instance, UK-based GreenScale, a sustainable data centre platform, received a GBP1 billion investment from Digital Transformation Capital Partners, an investment management firm with a focus on digital transformation, in November 2024. There are no signs of slowing down for AI com - panies in this segment. Analysis by Morgan Stanley projects that power demand from gen - erative AI will increase at an annual average rate of 70% through 2027. Recent advancements in AI have also revitalised the legal tech sector, as evidenced by Harvey AI’s recent USD300 million Series D funding round. Increased regulation in emerging tech sectors In response to this surge in AI-related invest - ments, legislators across the world have stressed the importance of providing legal cer - tainty for investments and innovation in AI. In August 2024, the EU AI Act officially entered into
force, aimed at ensuring that “humans maintain control” of the technology for the protection of consumers. The UK government has continued to develop its “pro-innovation” approach to AI regulation. In February 2025, the UK published the “Artificial Intelligence Playbook for the UK Government” , aimed at supporting AI innovation while ensur - ing responsible and ethical use of AI. This fol - lowed on from the UK government’s 50-point “AI Opportunities Action Plan” in January 2025 and the creation of the AI Safety Institute in November 2023 out of the Frontier AI Taskforce. Broader UK AI government reforms include pro - posals to amend UK copyright reforms as well as a potential AI Safety Bill, which is under con - sideration by the government. Overall, the UK’s current trajectory in AI regula - tion seeks to promote technological innovation while implementing measures to safeguard ethi - cal standards and public interests. Commercialisation of university spin-outs in the UK A university spin-out is a company formed based on research by a university, primarily to exploit the intellectual property that has been devel - oped. According to research from Beauhurst, as of April 2024 there were 1,317 active spin- outs from UK universities. Of these, the most dominant spin-out sectors include life sciences, climatetech and cleantech, although AI still tops the rankings of emerging sectors. The challenges faced by UK university spin- outs are complex, with challenges in navigating university governance structures and exces - sive equity stakes being significant barriers to commercialisation. In November 2023, the UK government published a report following
613 CHAMBERS.COM
Powered by FlippingBook