Tech Nation looks for new home as UK Gov hands tech ecosystem contract to Barclays
Reading Time: 4 minutesAfter over ten years in operation, Tech Nation, the UK’s government-sanctioned ecosystem builder for UK tech startups and growth tech companies is to cease operations after losing its grant funding to a programme run by Barclays Bank Eagle Labs.
The team behind the non-profit, which derived the bulk of its funding from the UK government, plans now to look for new backers and a new direction, after closing its doors on 31st March 2023. Tech Nation’s visa programme will continue in the immediate term.
In a statement, Tech Nation said: ‘With this foundation removed, Tech Nation’s remaining activities are not viable on a standalone basis.’
However, its Chief Executive, Gerard Getch, said, Tech Nation is also ‘actively seeking interested parties to acquire its portfolio of assets to take forward in a new guise. We have exhaustively explored whether Tech Nation could continue without core government grant funding, but have concluded after extensive consultation that this is not an option.’
He added: ‘We have a portfolio of Tech Nation assets and an internationally acclaimed brand, and we have already started discussions with mission-based organisations to take these forward. We are inviting Expressions of Interest from interested parties.’
The move comes at a time when the UK government has been playing lip-service to the idea of the country as a ‘Science and Technology Superpower’. A recent speech by the chancellor saw him imploring entrepreneurs to move to the UK:
‘If anyone is thinking of starting or investing in an innovation or technology-centred business, I want them to do it here. I want the world’s tech entrepreneurs, life science innovators, and green tech companies to come to the UK because it offers the best possible place to make their visions happen,’ he said.
However, the closure of Tech Nation and the rise of other initiatives abroad have left the UK looking pretty thin in the ‘encouraging innovation’ department.
Tech founders and investors are already being attracted by the $369bn on offer under the US Inflation Reduction Act for technology startups. In the EU, states like France are actually ramping up support for tech entrepreneurship. Indeed, state bank Bpifrance is pumping another €500m into deeptech startups.
Meanwhile in the UK, the government has cut back the R&D tax credit scheme for start-ups. And in a survey by industry body Coadec of more than 250 UK founders, the majority said the cuts made the UK significantly less attractive.
The Sunday Times had previously reported that government officials had been concerned that Tech Nation was ‘breaching state aid rules because it had failed to become self-sufficient’ which led officials to put the contract out to tender earlier this year.
Tech Nation has long been embedded in the U.K. tech startup scene. Tech City UK, its predecessor, was launched in 2011 by former prime minister David Cameron and concentrated largely on the London ecosystem until 2018 when it merged with Tech North (based in Manchester). It’s since gone on to run myriad programmes connecting tech startups and scale-up with each other and with investors in the U.K. and abroad.
The organisation claims it has helped make the UK the leading digital economy in Europe. While 80% of startups fail within their first 2-5 years, over 95% of startups on Tech Nation’s accelerator programs have gone on to scale, it claims. More than a third of all tech unicorns and decacorns created in the UK have graduated from a Tech Nation program, collectively raising over £28bn so far in venture capital and capital markets. Alumni include Monzo, Revolut, Depop, Bloom & Wild, Zilch, Just Eat, Darktrace, Marshmallow, Ocado, Skyscanner, Peak AI and Deliveroo. As a government-backed organisation, Tech Nation says it delivered a £15 return on every £1 funded by the UK Government.
Critics of the government’s decision to hand the contract to Barclays say it will put it into a conflict of interest, such as needing to support startups in the fintech space which might compete with it. One said the government has ‘effectively handed Barclays funds to acquire new customers’ and was a ‘potential competitor or customer of the startups it’s meant to be supporting.’
Many Northern tech leaders had previously expressed dismay that Tech Nation would lose government support at this time in the economy.
‘There’s such a gap in equity for Northern funders still. Organisations like Tech Nation are effectively the connective tissue between what is ultimately still a nascent ecosystem on a global scale,’ Ben Davies, group marketing director at financial services firm Praetura, told Prolific North.
Dan Sodergren, co-founder of people support platform Your FLOCK, based in Manchester said: ‘Without Tech Nation, we would not have the ecosystem outside of London that we have. They also were fundamental with programmes like Libra, Net Zero net or Rising Stars. These things were happening way before the rest of the market.’
‘Whatever you think of them, good or bad, the death of Tech Nation is the end of an era for the startup ecosystem in the UK. The idea of Government as a provider of startup advice to founders backed by Tier 1 VCs is finished. We have to make sure any help now reflects the needs of the future not the past – that means keeping the good things like a well-known visa offer intact and making Government focus on creating the best environment for tech startups, with extra support going to those who need it most not to those who can probably find it anyway,’ said Dom Hallas, Executive Director of Coadec.
Ref: techcrunch
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