UK Warns of AI Startups Leaving Due to Capital Shortfalls, Regulatory Complexity

Promising artificial intelligence (AI) startups created in the U.K. are at risk of leaving for other countries like the U.S. due to lack of adequate capital, regulatory complexity and differences in culture, according to a British government committee report.

“The U.K. risks being an ‘incubator economy’ for other nations, as innovative British technology firms pursue greater growth potential in other markets or seek acquisition by foreign companies,” the Communications and Digital Committee of the U.K.’s House of Lords’ Communications wrote in the report released Monday (Feb. 3).

One example cited by the report was DeepMind, whose CEO shared a 2024 Nobel Prize for an AI model that solved a half-century biology challenge. Instead of going solo and becoming a British powerhouse, it sold itself to Google in 2014. DeepMind developed Google’s flagship AI model, Gemini.

Today’s most advanced AI models and systems are being developed and scaled in the U.S. by OpenAI, Google, Meta, Anthropic, Amazon, Nvidia and Microsoft, among others. China has its own AI leaders in Baidu, Tencent, Alibaba and many more. France’s most prominent AI startup is Mistral.

The consequences of the U.K. falling behind are “significant,” the report stated. It could lead to “decreased global competitiveness, weaker economic prospects and a ‘brain drain’ of talented individuals” as AI advances rapidly. The report said 47% of AI-related revenues in the U.K. are generated by businesses with U.S. and other foreign owners.

Nathalie Moreno, a partner specializing in AI at Kennedys law firm in London, told PayTechFocus that the report “underscores a growing gap between the U.K.’s ambition and execution in AI and tech policy. She added that “fragmented government support, limited access to capital in the U.K., risk-averse investors, and regulatory uncertainty are driving startups abroad.”

There have been attempts by the U.K. government to nurture AI startups in the form of financial reforms, tax credits, investment incentives and pro-innovation initiatives. But these disparate programs have resulted in an “overly complex spaghetti of schemes” that are delivered piecemeal and “fail to offer a coherent pathway of financial support,” the report said.

Moreno also said that the U.K.’s “sector-specific approach” to regulating AI, which it deemed as more pro-innovation than the EU’s blanket AI Act, actually creates “uncertainty” among startups. Under former Prime Minister Rushi Sunak, the U.K. tasked existing regulators in different industries to oversee AI based on a set of values with discretion on how to apply it.

Jiahao Sun, CEO of British AI startup FLock.io, told PayTechFocus that regulatory “ambiguities” make it “difficult for startups to plan long-term strategies.” Navigating “complex compliance requirements” also requires “significant resources” that a startup might rather invest in innovation, he added.

‘Go Big or Go Home’

Simon Barnes, professor of practice in entrepreneurship and innovation at the Warwick Business School in England, pointed to capital and cultural obstacles as well. Barnes is a former venture capitalist.

“In the U.K., we have a general cultural belief that we are very good at inventing things, but not particularly good at commercializing them,” Barnes told PayTechFocus. “There’s a constant fear that in every wave of technology, we are often at the forefront of developing it, but then we hand it to other countries to make a big commercial success of it.”

The British startup mindset is also more risk averse, which Barnes said was due to having less venture capital than the U.S. In California, for instance, a “very large proportion” of the world’s venture capital is raised and invested just in that state and likely exceeds the total for Europe, he added.

“The U.S. approach is more, ‘Let’s go for it,’ or ‘[Go] big or go home,’” Barnes said. “It’s easier to take risks when you have a lot of money behind you.”

According to the report, early-stage funding of up to $15 million in the U.K. is on par with Silicon Valley. But for rounds of $15 million to $100 million for “breakout” startups, and over $100 million for scaling up startups, the U.K. is “significantly behind” Silicon Valley.

But Tom Firth, a Brit based in New York who is founder of Cotera, said the risk aversion personality broadly characterizes the population.

“Britain is a terrible place” to start a software company like an AI startup, he told PayTechFocus. “I say this with sadness, but it’s true.”

Firth explained that the culture is “not optimistic,” “not ambitious,” “not confident,” “risk averse” and the U.K. itself is a “small market” so startups with grander ambitions have to go to bigger markets to thrive.

Moreno said that to prevent further brain drain and capital flight, the U.K. will need to create a clear AI and tech investment strategy to unlock domestic growth capital for scale-ups and simplify regulatory frameworks.

“The government should commit to scaling these efforts rapidly, ensuring startups have a clear, accessible pathway to regulatory compliance and innovation support,” she said.

Moreno added that the U.K. should also deliver on its recently announced AI Opportunities Action Plan, which pledges to ramp up AI adoption across the U.K. through world-class research, startup scale-up support, AI governance leadership and other actions.

“The U.K. still has all the right ingredients to be a global leader in AI and tech, but without bold reforms, it risks becoming a training ground for companies that scale elsewhere,” she said.

Corpay Keeps Focus on Cross-Border and Corporate Payments Corpay Keeps Focus on Cross-Border and Corporate Payments

Corpay Keeps Focus on Cross-Border and Corporate Payments Despite Macro Turbulence

Corpay, earnings, b2b payments

As the global transportation and logistics sectors navigate economic uncertainty, rising fuel costs and increasing regulatory pressures, fleet managers are reevaluating their operational strategies.

The focus is shifting toward efficiency and cost savings, making payment and expense management a critical component of modern fleet operations. That was what Corpay executives told investors on Wednesday’s (Feb. 5) fourth quarter 2024 earnings call. And it’s good news for them.

“The only thing that has changed since our last call is that the macro has gotten a lot worse … our core businesses have remained just as strong,” CEO Ron Clarke said.

Still, a combination of FX headwinds and a weaker international currency environment clipped around $20 million from print revenue, though a favorable tax rate provided a counterbalance, he added.

Despite external pressures, Corpay’s Q4 results showcased the company’s ability to maintain stability and even drive growth in turbulent conditions. For Q4 2024, Corpay reported revenues of $1.03 billion, a 10% increase year-over-year, with organic revenue growth reaching 12%. Adjusted net income rose 18% to $383 million, while adjusted EPS climbed 21% to $5.36.

Key Growth Segments: Corporate Payments Leads the Way

Corpay’s Corporate Payments division was the standout performer, growing 26% in Q4 and 20% for the full year. This growth was fueled by strong demand for accounts payable (AP) automation and international payment solutions. The company secured a major enterprise AP client, marking its expansion beyond the mid-market segment into large-scale corporate accounts.​

“We primarily compete with banks, which control over 90% of international payment flows,” Clarke said. “But our superior technology and proprietary network give us a strong edge in this market.”

Corpay remains active in M&A, with plans to further expand its corporate payments business. The integration of GPS Capital Markets and Paymerang is well underway, and both deals are expected to add $0.50 in cash EPS accretion in 2025​.

Corpay’s Vehicle Payments segment showed mixed results, with Q4 organic revenue up 8%, improving from 4% in Q3. Growth was primarily driven by increased adoption of digital vehicle payment solutions in Brazil, where the company has been expanding aggressively. Insurance-related revenues in the region rose over 130%, and Corpay sold nearly 300,000 vehicle insurance policies in Q4 alone.

Read more: Corpay to Acquire Brazil-Based Gringo to Expand Vehicle Payments Business

The company also acquired Gringo, its second vehicle payments acquisition in Brazil, expanding into the car debts payment market.

“This gives us entry into a huge Brazil payments TAM, approximately three times the size of our toll TAM, and very early days in terms of penetration,” Clarke noted.

PayTechFocus Intelligence’s “How the World Does Digital” report surveyed 67,000 consumers across 11 different countries. It found that Brazil was far ahead of all of them — including the United States — in digital engagement. Drilling down into the results, in 2023, 66.8% of Brazilians used mobile banking apps on their phones at least once a month, and 46.8% used these apps at least weekly.

Corpay is also focusing on cross-border payments. Revenue for that segment jumped 20% year-over-year, driven by 43% sales growth in Q4. Corpay is aggressively expanding its cross-border solutions, leveraging a proprietary network that allows it to compete effectively with banks, which still control 90%+ of international payment flows.

Fluctuating fuel prices continue to be one of the most significant challenges for fleet operators. Companies are deploying fuel hedging strategies and data-driven purchasing decisions to mitigate volatility. Corpay offers solutions that provide detailed fuel pricing insights and analytics, enabling fleets to make smarter purchasing decisions and reduce overall fuel spend.

Ultimately, Corpay’s 2024 results highlight a company firing on all cylinders, with record adjusted earnings and a rapidly expanding corporate payments business. However, macroeconomic headwinds — particularly foreign exchange volatility — are expected to weigh on 2025 performance.