UK-based Literal Labs raises €5.4M to build logic-based AI algorithms: Know more

Newcastle-based Literal Labs, a company developing logic-based AI algorithms, has raised £4.6M (nearly €5.45M) in pre-seed funding.

The investment was led by the science and tech-focused investment firm Northern Gritstone and co-led by London-based fund Mercuri. Additionally, the round also saw participation from Sure Valley Ventures, Cambridge Future Tech SPV, and several angel investors.

Esha Vatsa, Partner at Mercuri, says, “We are excited to back Literal Labs as it redefines AI with a radically efficient alternative to existing neural networks. The team, combining deep research expertise and proven industry leadership, is uniquely positioned to commercialise this innovation.”

An AI using logic-based algorithms

Founded in 2023, Literal Labs is a company focused on AI algorithms that use logic-based techniques to build custom AI models. Benchmarking studies show these models operate at higher speed, use less energy, and provide greater explainability than neural networks.

The models are designed for companies seeking to move away from GPU-heavy algorithms, especially those facing regulatory requirements or working with battery-powered products.

Founded as a spin-out from Newcastle University, the company was established by Dr. Alex Yakovlev and Dr. Rishad Shafik. In 2023, Noel Hurley, a former Arm executive, was appointed CEO.

Literal Labs builds on the work of mathematician Mikhail Tsetlin. Its AI systems, based on the Tsetlin machine, use propositional logic rather than the statistical approaches found in neural networks. This structure enables more efficient computation and faster inference.

The UK-based company has reported results from recent MLPerf anomaly detection benchmarks. The results show that its models deliver 54 times faster inference and use 52 times less energy compared to neural networks. 

The company’s models also outperformed XGBoost, showing 250 times faster performance in machine learning applications.

Capital utilisation

Literal Labs will use the funds to expand its engineering team and launch its first commercial product in 2025. The company doubled its headcount from 6 to 12 in 2024 and appointed Leon Fedden, former AI Deep Learning platform lead at AstraZeneca, as Chief Technology Officer.

Noel Hurley, CEO of Literal Labs, says, “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 who 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, adds, “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.”

Brief about the lead investors

Northern Gritstone, an investment company focused on science and technology businesses in the North of England, announced in April 2025 that it had raised additional funding, bringing its total committed capital to £362M. Since its launch in May 2022, the company has made 37 investments across areas including semiconductor design, novel materials, secure computing, AI, healthtech, and gene therapies. 

Through NG Innovation Services, Northern Gritstone supports early-stage company founders with funding and operational guidance under its ‘Capital+++’ approach.

Mercuri is an early-stage venture capital fund that leads pre-seed and seed funding rounds for UK technology companies. The firm supports entrepreneurs building tech-driven products for enterprise use and consumer digital lifestyles.