The New Frontier - Your weekly science and innovation update - 24th August 2026

AI megadeals

PitchBook’s Q2 2026 AI Report puts venture funding in AI at $407 billion across 3,500 transactions in the first half, already above the total for 2025. The shape matters as much as the size: frontier labs took 71% of the money, while vertical applications (companies building AI products for a specific industry on top of the frontier models, in healthcare, financial services, IT, industrial and consumer markets) accounted for 63% of the deals but 13% of the capital, and Q2 deal count fell 22% even as AI absorbed 64% of all venture dollars. PitchBook expects concentration, not scarcity, to define the rest of the year. There is no shortage of capital chasing AI, and tighter credit after the Iran-driven inflation shock will only temper it at the margin. The money is flowing to a narrowing set of perceived long-term winners at the frontier and infrastructure layers while everyone else competes for the remainder. For occupier markets, that means a handful of very large, fast-growing requirements.

Three British names sit in the top ten deals of the quarter: Isomorphic Labs ($2.1 billion), Wayve ($1.26 billion at $8.6 billion) and Ineffable Intelligence ($1.1 billion seed at $5.1 billion. All three are in London, and all three should be in expansion mode as a result.

Two other useful points to note. Semiconductor Series A pre-money valuations jumped from under $60 million to a median of $520 million, and autonomous machines funding doubled to $52 billion, pointing to light industrial and hybrid schemes.

Chips with everything

Three announcements in three weeks have made the UK chip cluster impossible to ignore. Callosum closed a $100 million seed round on Thursday, one of Europe’s largest, led by Atomico and including equity investment from the £500 million Sovereign AI Fund. The company was founded by talent from Cambridge University and says it has built a software layer that removes reliance on any single frontier model or chip.

Fractile is in talks to raise around $600 million at a $6.5 billion valuation, six times its May mark, on the back of a $250 million chip supply deal with Anthropic. The company was founded by talent from Oxford University.

And Olix raised $312 million at a $3.3 billion valuation, with Arm and the Sovereign AI Fund among the backers. The firm is designing the next generation of AI chips. The guy behind the company is 25, and this is not his first venture. He taught himself to code as a teen and founded neurotech company CoMind. He is also a fellow of the Thiel Fellowship, which gives funding to young people with bright ideas. For real estate, following the talent in this fellowship is a good way to identify the next exciting potential scale-up.

So that is three UK companies looking to transform the chip industry and take on the big players.

For real estate, the geography is interesting. All three are London-headquartered, but the engineering is going to Bristol. Fractile has committed £100 million to UK operations, including a new hardware engineering centre in Bristol; Olix is hiring across silicon and photonics in both cities. A London–Bristol semiconductor corridor is forming.

The defence tech barbell

PitchBook’s Q2 Defence Tech Report describes a barbell. Investors put $16.4 billion into 249 defence deals in the quarter, the trailing twelve-month total of $69.5 billion is up 63%, and defence is now around 7% of global venture capital. Anduril’s $5 billion raise at $61 billion was 30% of the quarter alone. Autonomous systems accounted for 42% of capital, with autonomous manufacturing, UAVs, and unmanned maritime being the fastest-growing segments, and the munitions and hypersonics segment jumped from $20 million to $665 million. That is money for making physical things: production floors, testing areas and secure workshops, increasingly funded by sovereign and corporate capital that wants portfolio companies close to primes and government customers.

US defence tech companies are receiving the majority of funding, which can impact UK real estate, so it is worth tracking how these companies intend to use the capital raised and whether they have secured UK contracts—something we do at Knight Frank.

The engineers move into the lab.

Novo Nordisk and AWS have created a co-innovation hub within Novo’s existing King’s Cross facility, where forward-deployed AWS engineers sit alongside Novo’s R&D teams to compress the path from target to first human dose. It is Novo’s third AI partnership in a year, after OpenAI and the Gefion supercomputer. Elsewhere, Amgen announced a new science and innovation centre in Hyderabad’s Genome Valley, fusing wet-lab science and AI and digital innovation. Earlier in the year, Eli Lilly formed a partnership with Nvidia for a joint co-innovation AI lab in the San Francisco Bay Area. So far this year, big pharma AI deals have reached $13 billion.

Two further signals from pharma this week. Moderna and Merck’s personalised mRNA melanoma vaccine met its primary goal in a 1,100-patient Phase 3 trial, the first late-stage success for any mRNA cancer therapy. Moderna’s shares closed up around 177%, validating the platform behind Moderna’s Harwell facility. And from Cambridge, Massachusetts, a year after its $9.1 billion purchase of Blueprint Medicines, Sanofi is laying off 229 staff and closing two Blueprint buildings.

Big pharma is investing in AI labs, often in partnership with tech, either by designing spaces within their existing portfolios or in new locations, while also restructuring their global footprint in response to M&A and the transformation of their drug pipelines.

The technician talent pipeline

19,665 students received T Level results, up 65% on last year, with a pass rate above 92%. The mix is what counts for science and innovation. EngineeringUK reports 8,307 completions (42%) in engineering- and technology-related pathways, up 46%, with construction, digital and engineering routes making up most of the total, behind education and health. Furthermore, engineering and technology recorded the largest rise in university acceptances of any subject, up 14% to 34,100.

The education policy backdrop is shifting fast, and in a direction that could change clustering activity. Prime Minister Andy Burnham has announced that schools across England will offer technical subjects alongside academic ones from Year 10, starting September 2028, with the pathways designed by mayors, colleges and employers around local growth sectors rather than set in Whitehall. The Rewiring the State statement of 31 July devolves the 16 to 19 education budget to mayors for the first time. The government announced new Technical Excellence Colleges aligned to sectors that are part of the Industrial Strategy.

Taken together, these amount to a deliberate attempt to wire skills supply to place and sector, and the map they draw is instructive. The five defence TECs are in Plymouth, Yeovil, Blackpool, Lincoln and Rotherham. The digital TECs sit in Manchester, Birmingham, Gloucestershire, Milton Keynes and London; advanced manufacturing in Wolverhampton, Durham, Stafford; clean energy in Teesside, Liverpool, Somerset, Colchester and south London.

Three implications follow. Clusters with technical training routes will become stickier because an occupier gains access to a placement pipeline. Mayors will compete for occupiers using skills as the lever, and the colleges themselves become occupiers. While they are already established, they may need to expand.

The evidence for healthy places

Finally, researchers led by Queen Mary University of London tracked 3,400 children in London and Luton from 2018 to 2022. They found that London children’s lung growth, initially stunted, caught up with that of children in Luton after the ULEZ was introduced.

It is not an isolated finding. Stockholm’s congestion charge cut nitrogen dioxide (NO2, the gas produced by combustion engines) and PM10 (coarse particulate matter from exhausts, brakes and tyres, small enough to be inhaled) by 15 to 20% and was followed by a roughly 50% fall in acute asthma visits among under-fives; Barcelona’s superblocks, which strip through-traffic from residential grids, were estimated to add almost 200 days to adult life expectancy if rolled out citywide, and the first three built report better sleep, wellbeing and social interaction. On green space, the Health Foundation finds a three-year gap in male life expectancy between English neighbourhoods with the most and least access to it, and a study of 4.6 million Londoners links residential green space, especially small pocket parks, to lower mortality. Taken together, the evidence points one way: the design of streets, air and open space around a workplace is a measurable health input.

In other news...

Northern Gritstone, the £382 million investor in spinouts from Leeds, Liverpool, Manchester and Sheffield, is opening a San Francisco office to connect its portfolio with US capital.

QuantumLight, the algorithm-driven VC co-founded by Revolut’s Nik Storonsky, closed an oversubscribed $500 million second fund.

GALLOS Technologies, advised by former GCHQ director Sir Jeremy Fleming, raised £35 million this week to build and back security startups.

The Lanarkshire AI Growth Zone secured a £300 million debt package this week from ING, ABN AMRO, Santander, the Scottish National Investment Bank and Siemens, underpinned by a £202 million National Wealth Fund guarantee covering 80% of the bank tranche. DataVita will expand its Airdrie DV1 site and build DV3, each around 40MW, with capacity contracted to CoreWeave on a 15-year lease; Dell is moving its Scottish team to the zone’s Mercury House. The structure is the story: the state is explicitly taking on credit risk to finance AI infrastructure. Some perspective from The Register: the two sites create roughly 100 permanent roles, and Dell’s move is an administrative office.