A Manchester start-up which is pioneering the next generation of artificial intelligence systems has raised a £1.3m investment.

MindTrace raised the capital from Accelerated Digital Ventures and the Northern Powerhouse Investment Fund through NPIF - Mercia Equity Finance, which is managed by Mercia Fund Managers.

Professor Michael Denham and Dr Kameliya Dimova of MindTrace are developing novel software algorithms mimicking the way the human brain works with Professor Steve Furber, the University of Manchester academic who designed the BBC Microcomputer and the processors for the chip giant ARM Holdings.

They have been joined by Sir Hossein Yassaie, the former CEO of chipmaker Imagination Technologies plc, as the company’s chair.

MindTrace is one of the few companies worldwide developing intelligent machines capable of ‘unsupervised learning’ or teaching themselves independently, which is regarded as the next step in the development of AI.

Its systems could have a wide range of applications including data management, cyber security and the internet of focus will be on systems for autonomous vehicles.

The company is developing an advanced collision avoidance system which will offer faster response times than current systems, perform better in poor lighting conditions and require less power and bandwidth.

The funding will allow the company to recruit a research and development team and a CEO, develop a prototype in collaboration with a major car manufacturer and raise Series A investment to bring the product to market.

Michael Dimelow, head of investment at ADV, said: “MindTrace represents a landmark opportunity to define the artificial intelligence industry through the development of unsupervised learning.

“Truly unsupervised machine learning has never been achieved and its potential to change society, business and the world is infinite.

“This combined with a team of global sector leaders based in Manchester – the original home of computers – is an extraordinary recipe. We’re really excited to support the company’s growth going forward”.

Ashwin Kumaraswamy, investment director at Mercia Fund Managers, said: “In MindTrace, we have brought together some of the world’s leading authorities who have transformed the computing and electronics industry and are now set on a new mission – to make machines think like humans.

“This revolutionary new technology will have the potential to solve some of the major real-life challenges society will face in the years ahead, but it will take time to develop and require support at each stage.

“As investors, we are committed to working with them over the longer term.”

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.