Asking a middle-aged British engineer to open up about his emotions is not the easiest task and Nigel Toon, 61, is no exception.
Mind you, lunch was not meant to be therapy. It was more of a “how are you feeling?” opening question for the tech entrepreneur who sold Graphcore, his artificial intelligence chip business, to Softbank almost a year ago.
Toon is precise and thoughtful, not prone to mindlessly gush. He wants to explain everything from the very beginning.
We meet in Rovi in Fitz-Rovi-a (geddit?), a slice of London north of the frenetic Oxford Street, miraculously uninhabited by tourists. It is a light, bright Yotam Ottolenghi restaurant, the pale oak tables and flooring brightened by splashes of the Israeli-born British chef’s signature red.
Vegetables are the main event, the sharing plates of food are fresh and zesty, perfect for a hot May day. It is a Toon family favourite so the entrepreneur does the ordering. Quickly, two celeriac shawarmas are placed in front of us in warm crusty rolls, followed by a fat burrata on a bed of luminous pink rhubarb cooked in honey.
Back to Toon’s feelings and his story. Graphcore had a meteoric rise from its birth in 2012, when it started as an idea in a Bath pub. Toon and his business partner Simon Knowles wanted to build a new type of powerful processor that would drive the AI revolution. They had sold their previous chip company Icera for $370 million in 2011 to Nvidia, which has gone on to become one of the world’s biggest businesses and their nemesis.
Graphcore raised a $30 million series A round in October 2016 and boomed from there. The founders’ previous successes and the excitement around the “next wave of computing” made it a hot property. Investment hit $730 million and its last valuation was a $2.8 billion in December 2020.
Enthusiastic backers of the British tech company included Sir Demis Hassabis, co-founder of Google DeepMind, Hermann Hauser, one of the brains behind Arm Holdings, Ilya Sutskever, formerly chief scientist at OpenAI, Sequoia, the Ontario Teachers’ Pension Plan, Fidelity and Schroders.
A major coup was an early contract with Microsoft. Yet as the tenacious British start-up grew, it ran up against the might of Nvidia and things started to come unstuck.
Our main course arrives: a mushroom and onion mixed grill with thick oval flatbreads and a tahini dip. A side of crisp green leaves offers a refreshing contrast to the unexpectedly meaty-tasting vegetarian dish, a relief for two carnivores.
As we tuck in, Toon explains: “I can’t say that Nvidia copied us, but they ended up doing similar things. They added dense compute, graph execution, high-bandwidth-memory.” The difference was, the US company had the scale and leverage to keep a very strong hold on the market.
Graphcore needed another $2 billion in orders to keep up, Toon reflects: “When you’re competing against a company that’s worth over $1 trillion, which effectively has infinite cash … you can’t do it as a venture-backed business.”
In 2019, as large language models started to appear in research labs, companies were trying to access the next generation of Nvidia products and chips got “political”, according to Toon. Customers were torn between, “do we keep doing this thing with Graphcore? Or do we need to depend on Nvidia? We were caught in the middle.”
The deal with Microsoft collapsed. Graphcore decided to push further into China, deploying kit for the likes of Baidu, Alibaba and ByteDance. Then the music stopped. As the tech cold war between the West and China heated up, the US Department of Commerce sent Graphcore a cease-and-desist letter.
Semiconductor supply chains are ferociously complex and Graphcore was banned from selling its hardware, with US components, to Beijing. At that stage, China made up 25 per cent of its sales and was on track to reach 70 per cent.
Previously enthusiastic investors changed their tune. In 2023 Sequoia wrote down the value of its stake in the business to zero. Graphcore was running out of road.
Then Softbank came knocking and it started work on a “next-generation product”. After months of rumours, in July 2024 the Japanese fund bought out Graphcore’s investors. Toon demurs when I ask about the value. Those familiar with the deal remark that it was cleverly structured so investors got all of their money back and staff got excellent payouts for their stock options.
Thus, three quarters of an hour into lunch, we finally get to his feelings. Was it a happy ending? “We were independent at this point, trying to compete on our own against Nvidia, in a world where raising money is very difficult. We did completely the right thing,” is his measured response. “The outcome for the UK in terms of investment, the fact that we will have a player in one of the biggest growth markets . . .”
The star of the Softbank portfolio is Arm, the British chip company bought in 2016 for $32 billion. Toon speaks “regularly” to Rene Haas, chief executive of Arm, and there are “lots of opportunities”.
Does it matter that Graphcore is yet another UK tech star to go into foreign hands? Toon shrugs. It depends, he ponders, what counts as sovereign technology. Is it ownership or where a company is based? “The team is here, the headquarters is here.”
But Softbank has not made any binding commitments to keep Graphcore’s headquarters in the UK, I counter. “Why would you change it?” Toon replies. He doesn’t think a British location is a hindrance as long as you promote your wares, especially in the United States, where “you’ve got to physically be”.
Baffled by the fear he kept hearing from significant British leaders about AI, Toon decided to write a book. Unlike many company bosses, he won a deal from a top publisher, Penguin, and is the author. How AI Thinks is an accessible guide to the technology and its history.
Today the future looks bright. With the clout of the new owner, Graphcore is hiring voraciously, “investing huge amounts, placing pre-orders for products that you wouldn’t believe with access to the latest technology” and it is more ambitious.
That’s as may be, but Nvidia, with its $2.7 trillion market value and stream of new product announcements, feels untouchable. Not so, says Toon, who constantly draws historical parallels. If you compare this era of AI to the rise of the internet then we are, he muses, only in about 1998. “What we’re seeing right now is the build-out of infrastructure for AI. Most of the hardware is used for training models. Very little is yet used for deploying AI applications.”
At this point, struggling to finish the mushrooms, we pass on pudding, nibbling at the last bits of squashy bread.
I ask what he plans to do next. He lights up. A seed investor and member of the government’s UK Research and Innovation board, he would love to start a venture fund. “There is such a huge opportunity around AI,” he said. “I don’t feel there’s another company in me. I feel like there are lots of companies with other people doing the hard work.”
When could he step back from Graphcore? “Let’s get together by the end of the year and see”, he chuckles. Watch this space.
Rovi bill
1 x burrata £17
1 x shawarma £17.50
1 x chicken kofta £25
1 x mixed grill vegetables £36.50
1 x Wildfarmed pita £6
1 x fattoush salad £7.50
Net total £91.25
VAT £18.25
Service charge £13.69
Total £123.19
CV
Age 61
Education Doctor of science degree awarded by the University of Bristol
Career Helped to build Altera, the Silicon Valley-based semiconductor company, from a private company with 100 people into a $20 billion Nasdaq-listed business; in 2002 he was co-founder of Icera, a mobile data technology company sold to Nvidia for almost $500 million in 2011; together with Simon Knowles, a co-founder at Icera, they started Graphcore; senior non-executive director of UK research and innovation, sat on the prime minister’s business council; investor and director at a number of emerging AI and semiconductor start-up companies including Intrinsic Semiconductor, DigiLab, Pienso and AIcoustic.
Author of the bestselling book How AI Thinks, published by Penguin/Torva in 2024, and is the author on three granted patents.
Family Married to Sally with two stepsons and two boys from his first marriage.
