After operating for more than ten years, Tech Nationthe UK government-sanctioned ecosystem builder for UK tech startups and growth tech companies has been forced to cease operations after cutting its grant from a program of Barclays Bank Eagle Labs.
The team behind the non-profit, which received most of its funding from the UK government, now plans to look for new backers and a new direction after closing its doors on March 31, 2023. Tech Nation’s visa program will be in the immediate term.
In a statement, Tech Nation said, “With this foundation removed, Tech Nation’s remaining operations are not viable on a stand-alone basis.”
However, the Chief Executive, Gerard Getch, said Tech Nation is also “actively seeking interested parties to acquire its portfolio of assets to move forward in a new guise. We have extensively investigated whether Tech Nation could continue without the government’s core funding, but have come to the conclusion 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 organizations to move these forward. We invite expressions of interest from interested parties.”
The move comes at a time when the British government is paying lip service to the idea of the country as a “Science and Technology Superpower”. A recent speech by the Chancellor, he saw entrepreneurs begging to move to the UK:
“If anyone is considering starting or investing in an innovation or technology-focused 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 provides the best possible place to realize their visions,” he said.
However, the closure of Tech Nation and the rise of other initiatives abroad leave the UK looking rather thin in the ‘driving innovation’ department.
Tech founders and investors are already drawn to the $369 billion offered under the US Inflation Reduction Act for tech startups. In the EU, states such as France are even stepping up support for technological entrepreneurship. That is indeed state bank Bpifrance pumps another €500 million in deep tech startups.
Meanwhile, in the UK, the government has reduced R&D tax relief for start-ups. And in a survey by trade association Coadec of more than 250 UK founders, the majority said the cuts made the UK significantly less attractive.
businessroundups.org understands that Tech Nation had previously approached the government asking it to consider incorporating it as a public entity, but those talks came to nothing.
The Sunday Times had earlier reported that government officials were concerned that Tech Nation was “violating state aid rules because it had failed to become self-sustaining,” prompting officials to tender the contract earlier this year.
Tech Nation has long been embedded in the UK tech startup scene. Tech City UK, its predecessor, was launched in 2011 by former Prime Minister David Cameron and focused largely on the London ecosystem until 2018 when it merged with Tech North (based in Manchester). Since then it has run numerous programs to connect tech startups and scaleups with each other and with investors in the UK and beyond.
The organization claims it has helped make the UK Europe’s leading digital economy. While 80% of startups fail within their first 2-5 years, it claims that over 95% of startups in Tech Nation’s accelerator programs have scaled. More than a third of all tech unicorns and decacorns created in the UK have graduated from a Tech Nation program and have collectively raised more than £28bn in venture capital and capital markets to date. 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 generated a £15 return on every £1 funded by the UK government.
Critics of the government’s decision to hand over the contract to Barclays say it will put the company in a conflict of interest, such as the need to support startups in the fintech space that could compete with it. One said the government “effectively gave Barclays money to acquire new customers” and was a “potential competitor or customer of the startups it is supposed to support”.
Many northern tech leaders had previously expressed dismay that Tech Nation would lose government support at this juncture in the economy.
“There is still such a gap in equity for financiers from the North. Organizations like Tech Nation are essentially the connective tissue between what is ultimately still an emerging ecosystem on a global scale,” said Ben Davies, group director of marketing at financial services firm Praetura, told Prolific North.
Dan Sodergren, co-founder of Manchester-based support platform Your FLOCK, said: “Without Tech Nation we wouldn’t have the ecosystem outside of London that we have. They were also fundamental with programs like Libra, Net Zero net or Rising Stars. These things happened way before the rest of the market.”
“Whatever you think of them, good or bad, the death of Tech Nation marks the end of an era for the UK startup ecosystem. The idea of government as a provider of start-up advice to founders backed by Tier 1 VCs is complete. We must ensure that any aid now reflects the needs of the future, not the past. That means leaving the good stuff, like a well-known visa offer intact, and the government focusing on creating the best environment for tech startups, with extra support for those who need it most, not those who need it most. probably find it anyway,” says Dom Hallas, executive director of Codec.
