For entrepreneurs and founders, the innovation landscape presents a range of opportunities. Whether it’s agentic AI, quantum computing, or personalised wellness, interconnected capabilities rather than isolated tools are changing how innovation is being approached. The key to success is understanding how these technologies can interact, and how they can be used to amplify each other's potential.
For those considering building an AI-driven business, there is a clear progression:
- Assessing and integrating AI strategically
- Managing risk and regulatory complexity to build investor confidence
- Securing funding that preserves your equity and control
- Preparing proactively for exit
This guide walks you through each phase.
Assessing and integrating AI strategically
Avoid the rush to adopt AI without understanding the true exposure.
Internal or external?
Using AI in core business products carries a higher risk than merely adopting it for internal applications. For instance, a customer relationship management system powered by AI will pose very different risks than an AI-driven diagnostic tool. For some businesses it can therefore make sense to start with lower-risk AI implementations to build expertise and manage risk. For example, use AI for data analysis, administrative tasks, and process optimisation and the like, before embedding it into customer-facing products.
Business continuity
Consider AI critical to your business continuity planning. If the tool failed tomorrow, could your business continue operating or would customer commitments be compromised? This analysis informs not just your decision to adopt AI, but also how deeply to integrate it and what back-up systems are necessary.
Don’t get locked in
Technologies evolve rapidly and understanding how easily you can switch providers or adopt alternative approaches will help guard against getting locked into one vendor with a product that’s no longer at the cutting edge.
Managing risk and regulatory complexity to build investor confidence
Your strategic AI integration decisions also carry immediate regulatory and compliance implications, so understanding this regulatory landscape is essential before finalising your AI strategy.
Different rules in different places
A fragmented regulatory environment, coupled with overlapping sectoral rules, creates significant challenges for businesses operating across different jurisdictions and/or industries. In particular, the global regulatory framework for AI varies dramatically and is evolving rapidly. For example, while the UK has adopted a pro-innovation principles-based approach (as exemplified by its AI White Paper), the EU AI Act sets a global high watermark with comprehensive standards and categorised risks.
Build compliance into your strategy
Faced with different regulatory regimes, do not wait for regulatory clarity that may never come. Instead, use strategic contracting to manage uncertainty, while maintaining a flexible approach to compliance. This means building compliance into your strategy from the outset: identify the key principles you want embedded in your business, conduct risk assessments, and take appropriate compliance steps, even in uncertain environments. Where uncertainty persists, put in place robust contracts to protect your position.
Thinking innovatively about compliance
Existing laws can be applied innovatively to new scenarios and creative thinking can address regulatory requirements, even when traditional compliance methods don't fit new technologies. For example, autonomous vehicles collect data about individuals through cameras - the challenge of providing privacy notices about how their data will be used can be solved by placing QR codes on the vehicle livery, allowing people to scan them with their phones to access the privacy notices. While these new ways of applying existing laws may only work to certain degree, they show the potential of innovative solutions. This principle applies more broadly: understand the regulatory intent, and search for groundbreaking ways to achieve compliance.
Securing funding that preserves your equity and control
With your AI strategy and regulatory framework established, securing funding becomes the next critical milestone. Founders must be exceptionally clear during investor conversations about what they're trying to achieve, what problem they're solving, and how their AI strategy and regulatory approach mitigate risk while capturing opportunities.
Currently, buyers can dictate terms and founders are competing for limited resources. With emerging technologies, buyers tend to be even more cautious, conducting more prescriptive due diligence when they encounter unfamiliar territory.
Who's interested?
Understanding different investor profiles allows you to target capital sources whose objectives align with your business model and growth trajectory. Be aware also that funding decisions you make today will fundamentally shape your exit options. Private wealth and capital, particularly via family offices, are becoming increasingly important funding sources. Family offices can be conservative in what they look to invest in, seeking to boost returns while ensuring stable growth for future generations. They often have different risk profiles than private equity or venture capital, taking a longer-term view. However, this longer-term orientation can benefit those founders who are willing to accept patient capital, though it shifts growth timelines and exit expectations.
Leverage the UK's innovation ecosystem
While innovation, of course, has no geographical boundaries, Oxford-Cambridge-London represents one of the most exciting innovation ecosystems globally. Industry/Academia partnerships in this heart of innovation provide access to cutting-edge technology and exceptional talent. Many universities offer structured programmes for industry engagement, from sponsored research to innovation challenges.
Venture funds target university spin-offs
A number of venture funds have also established themselves in these locations with the specific intent of investing in university spin-offs. This density of specialised investors means unrivalled access to funders who understand your technology and sector deeply. These investors often have networks that extend beyond providing capital, through to technical expertise and market connections. Meanwhile, innovation hubs and accelerators help to grow networks. These organisations can provide not just workspace but connections to mentors, potential partners, and other founders facing similar challenges.
Preparing proactively for exit
Every decision you've made so far, from AI integration to funding structure, directly impacts your exit options.
Key differentiators for buyers
Exits take many forms (fresh investment, wholesale sale, or floating) and each require different preparation. Buyers will scrutinise your AI integration decisions (can the technology be replaced?), your regulatory compliance framework (what liabilities exist?), and your funding structure (how much equity remains?). The work you completed in earlier stages will now determine whether buyer due diligence reveals a business in good shape or a collection of unmanaged risks. Clean corporate records, well-structured contracts, and clear intellectual property ownership all become crucial differentiators.
Securing a successful exit
The single most important factor in preparing for exit is assembling the right team around you. Your exit advisory team (comprising tax specialists, accountants, lawyers, and corporate finance professionals) must understand your business, your objectives, and your red lines. With this knowledge in hand, your advisors can help you negotiate optimal terms and ensure a successful exit.
Ready to build your innovation-driven business?
Whether you're just beginning your AI integration journey or preparing for exit, expert advisors who understand these interconnections can help you capture the full value of your innovation. That’s where Mishcon de Reya comes in.
Watch our film to hear from two of our experts directly or connect with our advisors who understand the Innovation Economy and can help you develop solutions and find your edge.
For more guidance, download our Founders' Handbook, Preparing for Exit Guide, and check our AI resource centre for up to date information on AI integration and regulatory frameworks.