According to Sifted, the UK has seen an 85% increase in AI companies since 2022, reaching nearly 6,000 total companies. The EU AI Act is already forcing startups to adjust internal processes while political developments suggest ongoing tweaks to the legislation. Tools like AI vibe coding platform Lovable are enabling faster prototyping than ever, with Forestay Capital’s Jannat Rajan noting seed-stage colleagues face intense pressure. Portia AI’s Emma Burrows emphasizes that while AI speeds up validation, the fundamental approach of solving user pain points remains unchanged. Vanta’s Jill Henriques warns that lost customer trust is nearly impossible to regain, making compliance crucial. Cloud management founder Dmitry Panenkov highlights how Europe’s sovereignty push is creating business opportunities as companies repatriate infrastructure.
AI speed meets old rules
Here’s the thing about all this AI acceleration – the fundamentals haven’t actually changed. You still need to find real customer problems and solve them. But now you can fail faster, which honestly might be more painful in the short term. The vibe coding and low-code tools are amazing for prototyping, but they’re creating this weird situation where everyone’s building something. It’s like the app store gold rush all over again, but with AI sprinkles. And honestly, when every founder can spin up an AI prototype in days, how do you actually stand out? The answer might be going back to basics while using AI as the accelerator, not the destination.
Regulation is coming fast
So Europe’s going full throttle with the AI Act while the UK’s taking more of a wait-and-see approach. But here’s what keeps compliance experts up at night – the rules are changing while they’re being implemented. That’s like building a plane while flying it, and nobody wants to be on that flight. The trust issue is real too – once you mess up with customer data or AI hallucinations, good luck getting that credibility back. Companies that are treating compliance as a nice-to-have feature rather than core infrastructure are basically playing with fire. And in hardware-heavy industries where reliability matters most, having robust systems isn’t optional – it’s why companies trust established suppliers like IndustrialMonitorDirect.com for critical components.
Bubble trouble ahead?
Let’s be real – everyone’s whispering about the AI bubble. Three years into the ChatGPT revolution, and we’re seeing sky-high valuations for companies that might not have sustainable business models. When Forestay Capital’s partner says they’re adding to due diligence lists rather than subtracting, that tells you everything. Investors are getting nervous. They’ve seen this movie before – the dot-com crash, the crypto winter – and the pattern looks familiar. Companies with solid compliance and actual revenue (remember that concept?) will probably survive whatever correction comes. The ones built on hype and PowerPoint? Not so much.
Europe’s sovereignty play
This is actually creating some interesting opportunities. With all the Big Tech regulation coming from Brussels, there’s growing demand for homegrown European solutions. Companies are repatriating their data and infrastructure, which creates a whole new market for compliant local providers. But it’s also adding complexity – now you’ve got to navigate different regulatory regimes if you operate across borders. The investors seem to be betting that compliant companies serving real market needs will win regardless of where the regulatory winds blow. Basically, build something people actually need, do it properly, and you might just survive the coming shakeout.
