Trust is now a technology: why UK founders are best placed to sell it

Most founders look at the war in Iran, rising tariffs and supply chain disruption and see a harder fundraising environment. They're reading the situation backwards.

Yes, geopolitical instability tightens capital, slows enterprise decisions and makes every board more risk averse. That part is real. But the same forces are doing something else simultaneously - something that most founders are missing at first glance. They are rewriting the procurement priorities of every large government and enterprise on the planet. And the category that has just moved to the top of that list is one where UK startups are unusually well positioned to win.

The category is trust - specifically, the ability to demonstrate that your technology is sovereign, auditable, and not dependent on a foreign government's goodwill to keep working. That might sound like a compliance issue. It is not. It is rapidly becoming the single most important commercial differentiator in enterprise technology.

Here's why that shift is happening now, why it is structural rather than temporary, and what founders should be doing about it.


Disrupting the global technology supply chain

We're already keenly aware of the current oil price spike and the shipping disruption - that's been headline news for the past two weeks. What's had less coverage is the impact to the technology supply chain. On 1 March, an AWS data centre in the UAE was struck, triggering major cloud outages across the region. A few days later, one of the world's only two sources of semiconductor-grade helium went offline.

Why helium? Because the facility that produces it sits inside the crisis zone - and without it, chip fabrication at scale becomes impossible. If the disruption extends beyond two weeks, logistics networks will take months to restructure. South Korean lawmakers were already briefing Samsung and SK Hynix executives about production disruption within the week.

This sits on top of a structural vulnerability that predates Iran. Independent analysis of the semiconductor supply chain is blunt: TSMC holds roughly 90% of the market for the most advanced chips - the 3nm and 5nm process nodes that power AI systems, smartphones, and high-performance computing - and that concentration will not meaningfully change for at least a decade. What the Iran conflict has done is add a second chokepoint on top of an already fragile system, at precisely the moment global AI infrastructure investment is demanding more chips, not fewer.

This matters to founders who are nowhere near the semiconductor industry. Every large manufacturer in Europe is now stress-testing supply chain resilience in ways it was not six months ago. That is already generating a steep rise in RFPs for supply chain visibility software, alternative sourcing platforms, and logistics resilience tools.

Four forces, one message

Iran is the latest, most visceral chapter in a story that has been building for several years. Chatham House identified 2025 as the year governments began systematically treating supply chain vulnerabilities as geopolitical weapons - and China has been the most deliberate practitioner.

From April 2025 onwards, Beijing imposed a series of escalating export controls on rare earth elements — the materials critical to EV motors, wind turbines, defence systems and semiconductor manufacturing - in which China controls over 90% of global processing capacity. In September 2024 it had already imposed export restrictions on drones and drone components - including flight controllers, motors and navigation cameras - dealing a direct blow to Ukraine's war effort. In October 2024, a ban on low-end chip exports threatened to halt European car production. None of this is theoretical.

Russia's invasion of Ukraine had already demonstrated, painfully, what dependency on a single energy supplier does to a continent's economy. Now add Trump's 15% global tariff regime, and the picture crystallises. Four separate forces - Middle East conflict, Chinese supply chain leverage, European energy dependence, and US trade unpredictability - are converging on a single message to every enterprise board: your technology dependencies are now a boardroom risk, not an IT procurement issue.

And as analysts tracking sovereign AI have put it, the race for AI supremacy is, fundamentally, a race for sovereignty itself.

Founders may see all of this as just noise that makes investors more cautious. The sharper read is the opposite. Every CIO who cannot confidently answer their board's sovereignty question is a potential customer for a UK startup that can.

The capital is already moving

This is not a future trend. The capital response to geopolitical instability is well underway and accelerating fast.

According to the latest research, European defence, security and resilience startups raised a record $8.7bn in venture capital in 2025 - up 55% year-on-year, nearly four times the level five years ago, and outpacing the broader European VC market, which grew just 16% over the same period. The UK leads Europe in this space, attracting $2.9bn in 2025 alone.

On the sovereign technology side, Gartner forecasts worldwide sovereign cloud spending will hit $80bn in 2026, up 35.6% year-on-year. Europe is growing at 83% - among the fastest of any region - and is on track to surpass North America in sovereign cloud spending by 2027.

These are not small numbers. And they are creating demand that the market has not yet figured out how to satisfy. Three US cloud providers still hold 70% of European cloud infrastructure, while European sovereign providers hold only 15%. The gap between what enterprise customers now want and what currently exists is where the commercial opportunity lives.


The €100bn demand signal enterprise CIOs are already acting on

Last November, France and Germany convened a Summit on European Digital Sovereignty, launching a joint task force whose first report is due this year. The EU's forthcoming Cloud and AI Development Act is expected to establish eligibility requirements for cloud providers that would effectively restrict US companies from public procurement.

Enterprise buyers are already moving. According to Gartner's 2025 CIO & IT Leader Survey, 61% of IT decision-makers in Western Europe plan to increase their reliance on local cloud and AI providers. 52% expect to accelerate data sovereignty investments. 47% are actively reevaluating their non-European cloud dependencies.

Forrester forecasts Europe's total technology spend will exceed €1.5 trillion in 2026, with sovereignty reshaping vendor choices across every major sector. The International Criminal Court, having had Microsoft cloud access threatened by US government sanctions, is transitioning to open-source European alternatives. The Danish government is running experiments to reduce dependency on US providers.

These are not edge cases. They are the signal.

For founders building in data infrastructure, compliance tooling, secure communications, edge computing, or any category where data residency and jurisdictional clarity matter, this is not a niche regulatory concern - it is the fastest-growing procurement priority in European enterprise technology.


The UK's awkward position is actually its advantage

And now the counter-intuitive insight at the heart of this analysis. Post-Brexit, the UK is excluded from the EU's €7.3bn European Defence Fund - the bloc's primary vehicle for joint defence R&D - and, as a third country, has only limited, case-by-case access to PESCO capability development projects. Many founders read this as a structural disadvantage, closed off from the largest sovereign funding pools in Europe.

It is not. A UK startup occupies a position that neither a US company nor a purely European one can replicate. It sits inside NATO and is aligned with European data and security standards, credible to German and French enterprise buyers, yet outside the EU regulatory machinery that US-based VCs are pricing in as an innovation tax. It can offer sovereign credentials on both sides of the Atlantic. That is a genuinely rare commercial position.

The UK government has assembled some useful infrastructure behind this thesis. In July 2025, the MoD launched UK Defence Innovation (UKDI), consolidating DASA and the Defence Innovation Unit under a single structure. DASA's non-dilutive grants require no matched funding, IP stays with the company, and 63% of contracts go to SMEs - a useful early-stage proving ground. A £500m Sovereign AI Unit - a government-backed investment fund for UK AI companies - sits alongside a public compute infrastructure anchored by the Isambard-AI supercomputer in Bristol and Dawn in Cambridge, adding credible domestic infrastructure to the story.

But the more important capital story is who is looking to deploy at scale. The US venture firms reshaping the global defence and sovereign technology landscape are not sitting on the sidelines. Andreessen Horowitz, which raised $15bn in new funds in January 2026, has placed defence tech and sovereign AI at the centre of its investment thesis - and led Mistral AI's Series A alongside General Catalyst, the most prominent example of US VC betting heavily on European sovereign tech.

European sovereign and defence tech startups are now scaling primarily on the back of cross-border US VC capital, because the depth of late-stage European capital has not yet caught up with the opportunity. That is a problem for European institutional investors. For UK founders with the right proposition, it is an open door.


The takeaway

The founders who will define the next decade are not necessarily building the best technology. They are building the most trusted technology - auditable, sovereign, jurisdictionally clean, and defensible to a board that has just watched a drone close the Strait of Hormuz and take an AWS data centre offline.

Geopolitical instability has a habit of creating permanent commercial categories. The cloud era was accelerated by the 2008 financial crisis forcing enterprises to cut infrastructure costs. Mobile-first was accelerated by a pandemic that made the office optional. The sovereignty era is being accelerated by a confluence of wars, tariff shocks, and supply chain weaponization that shows no sign of reversing.

The question for founders is not whether this is happening. It is whether you have positioned your company to be the answer when your customer's board asks the sovereignty question - because they will be asking it, probably this quarter.
 

 
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