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The AI cluster forming in London’s West End

West End AI

London’s West End is best known for its restaurants, bars, and historic theatre district. Thanks to a growing number of high-growth artificial intelligence startups locating in the area, the West End may soon be considered the UK’s latest AI cluster and a global hub for the industry.

At first glance, the area within western central London is unlikely to be thought of as the centre of a movement for UK-based AI startups. Historically, digital startups in AI and beyond have been drawn to East London, which from the late 2000s and early 2010s became one of the most prominent centres for UK tech.

But a cluster of high-growth AI firms entering stage right into London’s West End may now be giving the East a run for its money.

“What you’ve got in London, is a nexus of a capital city with governance and legislation and world-class universities within a short ride, like Imperial [College London],” says Alex Burton, director at Rebellion Defence, an AI company working in the defence sector that was recently valued at $1bn.

Founded in 2019, Rebellion Defence has become a major player in the AI business, becoming a unicorn on the back of its $150m funding round in September 2021. The AI startup is by no being alone in locating in the tourist hub around the West End.

Based just off Soho, Synthesia – currently estimated by Dealroom to be valued at $286m – has developed an automated technology that converts written text into a video presented by a synthetic avatar.

And just two minutes from Synthesia’s London headquarters is Encord, an AI computer vision labelling firm and Y Combinator alumni.

Whether consciously on the part of the companies or not, a pattern appears to be forming of promising AI startups basing their operations in the West End.

“I think it’s because the talent is here, it’s very well positioned with respect to good universities and being able to get good European talent and also just global talent, people around the world come here,” says Encord co-founder and CEO Eric Landau.

“And the VCs are now recognising that, so the money is following. The talent was always here, but now the money is following. And as the money is coming, this tech hub is really blossoming and burgeoning.”

Among the other AI-specialist startups based around the area include digital identity verification company Sumsub, investment data analytics company Accelex, and AI-powered insurtech company Envelope Risk.

Franck Vialaron, CEO and co-founder of Accelex, based in Mayfair, tells UKTN that Mayfair is a “hub” for investors, advisors and servicers in private markets.

“Being in the area allows us to connect with those clients and partners who leverage our technological expertise to allow them to focus on the more human elements of their own businesses,” he says.

East London Tech City

It’s certainly no surprise that London is a major hub for various sectors within the tech industry. It often ranks second behind Silicon Valley and is fourth for global VC investment.

However, the west has long been overshadowed by London’s eastern tech city. Since the early days of David Cameron’s premiership, Shoreditch has attracted both home-grown UK startups — like Seedrs and Wise — and the British operations of foreign tech giants like Microsoft and Google.

The formation of East London’s tech hub came in part due to a push from the government, keen on establishing the city, and the country’s standing as a major player in the industry. But tech is of course nothing if not mutable, and the rapidly growing AI industry, which may well take the crown as the country’s top tech sector from fintech (if current investment trends continue), appears to be gravitating towards the west.

East London still dominates the city’s contribution to fintech, which for some time has been considered one of the dominant driving forces of modern British tech. But with AI investments on the rise and clear intentions from the – albeit capricious – government to support the sector, an AI cluster in the west may come to rival fintech’s hegemony.

AI-readiness

Looking at the data for AI, specifically a study published by software analytics company SAS, the western AI trend appears to be more than anecdotal. The study ranked UK cities and London boroughs on an AI-readiness Index to determine which areas of Britain were leading the way in AI.

The index found the two boroughs in London that were the most “AI-ready” were Camden and Westminster, which jointly contain the area known as the West End, while the western borough of Chelsea and Kensington are not far off. The factors contributing to these rankings include the availability of University MSc AI courses, the number of jobs being advertised in the AI industry in the area, and the level of R&D investments.

“Camden and Westminster placed first and second in our AI-readiness index for London, a sign that AI businesses in the capital are developing a cluster in these boroughs,” says Glyn Townsend, senior director of education services at SAS.

“Both locations are central and offer a number of relevant university degrees. As the UK continues to tackle an AI and analytics skills gap, businesses in Westminster and Camden are more likely to have access to expertise on their doorstep.

“They’re also among the boroughs that have the most AI-related jobs available across an array of sectors, which could be due to how well connected the areas are by tube, train and bus.”

Townsend also noted the study found a “70% five-year business growth rate in Westminster, compared to negative growth in some boroughs” making it “no surprise London’s AI sector is gravitating towards these areas.”

The study also found that spending on AI research in Camden and Westminster was significantly higher than other London boroughs at almost £450m.

With cash, infrastrucure and talent flocking to the area, the West End’s AI scene is firmly in the limelight. Time will tell whether it becomes a showstopper on the global stage.