The frenzy around the potential transformational impact of artificial intelligence (AI) means it continues to the hottest ticket in town for investors.
Latest data from PitchBook shows there have been more than 1,700 funding rounds for AI start-ups in Europe so far in 2024.
Scotland has seen some of the biggest deals in the UK sector with highlights including Edinburgh-based financial services firm Aveni.AI announcing an £11m Series A investment led by Puma Private Equity and backed by industry heavyweights Lloyds Banking Group and Nationwide.
Edinburgh-based Wordsmith also raised around £3.8m from backers including Skyscanner co-founder Gareth Williams for its technology which aims to transform the legal industry by enabling in-house lawyers to instantly draft responses to complex queries, and draft and review contracts.
Other high-profile Scottish AI deals have included Malted, which raised £6m to develop AI applications for businesses, and Continuum Industries, which aims to accelerate the development of new energy infrastructure.
Oliver Johnston-Watts, an investment analyst at Edinburgh-based Par Equity which has been involved in several recent funding deals, says the capital is increasingly recognised as a global AI hub thanks in part of the University of Edinburgh’s 60 years of research in the field.
Although he describes Scotland’s AI deal flow as “robust” with strong investor interest, he notes something of a change in approach from funders.
“There’s a noticeable shift toward more cautious investments, with increased focus on performance and scalability,” says Johnston-Watts.
“Well-differentiated AI models with clear market potential and a sustainable competitive edge continue to be in high demand.”