On Wednesday (September 16), the UK AI startup Emulate launched a new round of funding, aiming to raise up to $700 million, with a post-money valuation of around $3.7 billion, led by Index Ventures and Lightspeed Venture Partners. Emulate was founded in August 2026. Its founders, Jack Parker-Holder and Matthew McGill, previously worked at Google's DeepMind, and were involved in creating DeepMind's Genie world model.

Genie can generate realistic videos and interactive 3D environments based on short prompts. When it was released in January, it caused a stir in the gaming industry, leading to a combined loss of billions of dollars in value for Take-Two, Roblox, and Unity. The model is trained to understand and replicate physical spaces and is considered a new frontier in AI research; competition in this area is less intense compared to large language models that drive ChatGPT, Gemini, and Claude. Emulate had been operating under the radar and is the third UK new lab to secure hundreds of millions of dollars in funding this year, emerging from DeepMind's London office.

New companies led by former researchers from major AI companies are commonly referred to as "neo-labs." These have attracted hundreds of billions of dollars in funding this year, often securing high valuations before their products even launch, relying on the reputation of their founders. Last month, Google's chief scientist Jeff Dean left to start an AI startup called Discovery Loop. David Silver, a former DeepMind researcher, raised about $1 billion at a $5 billion valuation for Ineffable Intelligence, while a team of former DeepMind and OpenAI engineers created Recursive Superintelligence, which raised over $600 million at a $4 billion valuation.

The two biggest costs for these companies are computing power financing and recruiting top researchers.