Tech Nation forced to close after losing funding to Barclays
Tech entrepreneurs react with surprise and dismay.
Tech Nation, the UK industry body set up in 2014 to support tech entrepreneurs in scaling up their businesses, has announced that it will be forced to close following the UK government's decision to withdraw crucial funding.
The announcement, posted yesterday afternoon, began as follows:
"After a decade as a government-backed organisation serving the UK scaleup tech ecosystem, we are today announcing that Tech Nation will be closing its doors from 31st March 2023. Tech Nation's core grant funding from DCMS is being awarded to Barclays Bank. With this foundation removed, Tech Nation's remaining activities are not viable on a standalone basis.
"As a direct result of the DCMS grant withdrawal, Tech Nation will be ceasing all existing operations through a carefully planned wind-down and has commenced a redundancy consultation process. Tech Nation is also actively seeking interested parties to acquire its portfolio of assets to take forward in a new guise."
The not-for profit organisation was set up to promote UK tech. This involved providing support for founders via coaching, network building, education, specific accelerators for companies focused on AI, cyber and fintech, running the global tech talent visa program talent and publishing research.
Tech Nation has been highly effective in helping UK tech businesses to scale, and bringing tech talent to the UK. More than 95% of the start-ups nurtured through Tech Nation's accelerator programs have gone on to grow further, and more than a third of the tech unicorns and decacorns created in the UK have graduated from a Tech Nation program. It's alumni includes some very familiar names such as Ocado, Depop, Bloom & Wild, Just Eat, Darktrace and Peak AI.
The organisation claims in its statement that for every £1 contributed by the UK taxpayers, it delivers a £15 return.
Indeed, the success of UK tech, valued at $1 trillion, and employing 4.8 million people, has been lauded in recent speeches by both the Prime Minister and Chancellor of the Exchequer as a great British success story, and a critical part of the UK economy. Jeremy Hunt even name checked Tech Nation graduates Monzo and Revolut in his speech at Bloomberg on 27th January, as examples of the UKs "world-beating fintech sector."
Given the demonstrable success of Tech Nation it is not obvious why the DCMS chose to award the £12.09mn Digital Growth Grant to Barclays Eagle Labs. A statement published on the DCMS website says:
"The Digital Growth Grant was awarded following an open competition and rigorous assessment process. The Barclays Eagle Labs bid represented the best value for taxpayers' money as the full grant will be allocated to supporting the UK tech ecosystem, with Eagle Labs absorbing all operational and people costs associated with delivering the programme of activity.
"It will enable Eagle Labs to launch new programmes to grow tech businesses as well as increasing access to Eagle Labs' existing services. The funding will double the number of mentoring sessions offered to tech firms to 1,500 a year.
"The independent panel assessing applications concluded Eagle Labs was uniquely positioned to deliver targeted support across the country. A bespoke regional partnership programme will ensure funding and training reflects the challenges digital businesses are facing in their area."
Tech entrepreneurs and VCs have greeted the news of Tech Nation's closure with dismay.
Ekaterina Almasque, General Partner at early-stage European VC OpenOcean said: "This is a difficult day for the UK tech industry. Tech Nation was founded to spearhead the UK's digital industry during its "Silicon Roundabout" heyday. So it's a troubling sign of the times that this body, which has overseen growth programmes for start-ups, digital academies, and international expansion efforts, has been forced to close its doors.
"The loss of Tech Nation will deny current and future entrepreneurs an important network for the UK tech industry. Building these connections are so crucial for start-ups in their earliest days of growth. It can help a firm secure funding, find talented employees, or simply share ideas with peers in the industry.
"If the UK government wishes to turn the UK into a new Silicon Valley, the industry needs grassroots support. Deep tech firms in fields like quantum technology, for example, have timelines measured in decades, and rely on targeted incentives and funding from government to ensure continued progress is made. Many countries around the world are making these efforts to back their tech economy. The UK must do the same if it is to avoid falling behind its peers.
"Simply branding plans with ‘Silicon' is not sufficient. We must ensure that we put in place the correct processes to bring talented founders with innovative software ideas all the way from ideas on a whiteboard to stock listings in Piccadilly Square."
A DCMS spokesman said:
"We have supported Tech Nation since 2017 to accelerate the growth of startups and scaleups across the UK.
"Our decision to make the Digital Growth Grant competitive brings the funding into line with the majority of government grants. Barclays Eagle Labs was successful because their application represented the best value for taxpayers' money, will benefit the most startups and scale-ups over the next two years, and was scored highest by an independent panel.
"We are committed to supporting Tech Nation until March 2023."