Six in 10 startups currently use AI, and 79% of those who don’t are planning to start using it in the next twelve months, according to the UK Startup Report 2024.

The report, published by the UK Startup Awards alongside Starling Bank, found that AI adoption among startups is becoming widespread across industries for a variety of functions, including the use of chatbots for customer service, data analysis, and marketing automation.

Perhaps unsurprisingly, those in the tech sector were the most likely to use AI in their businesses, with 72% of tech founders utilising it compared to 51% of those outside the tech field.

Overall, despite the increasing reliance on emerging tech, the skill sets most in demand by entrepreneurs are administrative and organisational abilities, with 42% hiring for this expertise, followed by creative talent (20%), and marketing and sales experience (13%), with just 5% of founders claiming to be most interested in the technical skills of new hires. 

The report, based on a survey of more than 1,000 businesses under three years old, found that tech startups were the most likely to recruit over 2025, with 94% of tech firms planning to hire compared to 81% of those in non-tech sectors.

Tech entrepreneurs are also the most likely to outsource their PR functions, with 13% of technology startups engaging external agencies to handle publicity compared to 9% of non-tech firms, reflecting what the report said is often the more complex, specialised PR needs of tech startups.  

The survey also found a clear distinction between the sources of funding for tech and non-tech startups.

While 91% of non-tech businesses rely on self-funding, tech firms are more likely to find external financing, with 31% securing venture capital funding and 44% benefiting from angel funding, likely due to the higher capital requirements that new technology firms need to get off the ground compared to non-tech ventures.

That’s also evidenced in the more than three-quarters of tech founders who reported that outside funding is key to their plans, with 59% anticipating they will need over £500,000 in 2025, compared to just 21% of those outside the tech sector.

The data also shows that UK entrepreneurs are turning away from traditional high street banks and increasingly choose digital lenders for their financial needs.

More than half of new businesses (57%) said they currently use challenger banks, including digital only banks like Monzo, Starling, Tide and Revolut, while just 43% reported having accounts with traditional lenders.

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According to the report, founders are looking for more tailored support from their banks in the coming year, including different types of financing options (32%), networking opportunities (18%), and dedicated business support (16%), with just 4% prioritising easy online banking and 7% international banking services.  

“It’s encouraging to see that the majority of startups are embracing technology like AI and digital banking solutions to power their growth,” said Adeel Hyder, managing director of SME banking at Starling Bank.

“We’re thrilled to see this entrepreneurial spirit thriving in the UK, with so many founders launching businesses with modest resources and a laser focus on their customers.”