The round is led by Northern Gritstone, the science and tech-focused investment firm from Northern England, and co-led by Mercuri, the London-based fund focused on companies at the intersection of media, entertainment and technology sectors, with participation from Sure Valley Ventures, Cambridge Future Tech SPV, and several angel investors. 

Spun-out from Newcastle University in 2024 by Cofounders Professor Alex Yakovlev and Professor Rishad Shafik, Literal Labs applies the Tsetlin machine approach to AI that is faster, explainable, and orders of magnitude more energy efficient than today’s neural networks. Like neural networks, the Tsetlin machine can perform complex machine learning training. However, unlike neural networks, it is based on propositional logic rather than biology, which makes it more efficient in terms of computation, speeding up inferencing, and less energy intensive.

Recent MLPerf Anomaly detection benchmarking shows Literal Labs can achieve 54x faster inferencing than “classic techniques” for machine learning applications, with 52x less energy consumption than equivalent neural networks. It also achieved 250x faster performance than XGBoost for machine learning applications.

Literal Labs is led by CEO Noel Hurley, who spent more than 10 years at Arm and led its CPU division, which accounted for over 70% of revenue – totalling approximately $1bn.

With Literal Labs having doubled its headcount from six to 12 in 2024, this new funding will be used to bring its first commercial product to market, grow its engineering team, and continue delivering on its vision for AI that improves life for all and treads lightly on our environment. 

Active since May 2022, Northern Gritstone has already made 37 investments in early-stage businesses in the North of England, expanded its investment team and built NG Innovation Services, its venture building ‘toolkit’ offering, inter alia: talent management; growth advice; business services; and the accelerator program, NG Studios.

A Breakthrough Born at Newcastle University

Founded by Professor Alex Yakovlev and Professor Rishad Shafik, along with venture builder Cambridge Future Tech, Literal Labs is built on decades of world-leading academic work in logic-based computing and energy-efficient systems. The company’s AI models are based on the Tsetlin machine, a logic-driven alternative to neural networks that achieves high-performance results using significantly less computational power.

Professor Alex Yakovlev (Head, Microsystems Group) and Professor Rishad Shafik (EEE Research Director), said: “Literal Labs is founded on years of our research on advanced compression methods, data representation, and highly modular, parallel implementations of the Tsetlin machine. We believe that this novel logic-based approach will fundamentally transform the next generation of machine learning applications where low energy consumption and explainability are crucial.”

Noel Hurley, CEO of Literal Labs, said: “We’re at a pivotal moment for AI with adoption continuing to accelerate alongside sustainability and cost concerns. Our logic-based AI offers a new solution for those that want and need high-performing AI that is faster, more energy efficient and more explainable than what’s currently available via neural networks. This funding comes at a time when we’re ready to significantly speed up our product development and will enable us to bring our first product to market later this year.”

Duncan Johnson, CEO of Northern Gritstone, added: “Literal Labs is Northern Gritstone’s first investment linked to Newcastle University, renowned for its technology-related research. We are delighted to support Noel Hurley and the Literal Labs team at a time when innovation can truly benefit from greater efficiency in AI.”

Rick McCordall, Head of Company Creation at Newcastle University said: “We are delighted that Literal Labs has concluded its £4.6 million funding round. Newcastle University spinouts have attracted £40 million of investment in each of the last two years. It’s great to see the years of research carried out by Professor Alex Yakovlev and Professor Rishad Shafik to create the IP combining with a strong management team to achieve this significant milestone. We look forward to supporting the company as it continues to develop.”

Adapted with thanks from Northern Gritstone and Literal Labs.