UK’s Tech Nation to close after government axes funding

The UK government has withdrawn funding from start-up network Tech Nation, forcing the UK industry body to close.

Tech Nation was formed in 2011 with the aim of bringing thousands of talented tech workers to the UK. It had worked with nearly a third of the country’s 122 unicorns since 2011 and ran the UK’s global tech talent visa, but will be forced to close after the government axed a key grant.

In September last year, it was reported that the UK’s Department for Digital, Culture, Media and Sport (DCMS) had decided to give £12m of grant funding, which Tech Nation had relied on, to Barclays Bank.

This decision has promoted Tech Nation to announce its closure at the end of March, with a statement explaining the not-for-profit cannot fund its accelerators, reports or visa programmes without the state backing.

“Tech Nation has made a huge and positive impact on the UK’s digital economy,” its CEO Gerard Grech said in a statement. “The UK now boasts over 20 places with one tech unicorn or more, five times what it was in 2014.”

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, the incubator said. More than a third of all tech unicorns and decacorns created in the UK have graduated from a Tech Nation program, collectively raising over £28 bn so far in venture capital and capital markets.

The team, who ran the quango from London’s Silicon Roundabout, said they will now seek new backers and a new direction. Grech also said that the not-for-profit is seeking buyers for its core assets and investment portfolio.

“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.”

UK power house

The future of the UK’s tech visa programme is less certain. Tech Nation will continue to operate it for now, but Barclays’ tech incubator Eagle Labs – who will pick up the grant – will not be responsible for the Global Talent Visa, which was designed to help founders and tech workers move to the UK to start and join high-growth businesses and has endorsed more than 3,000 people.

The decision raises questions for the UK government and the announcement of Tech Nation’s closure comes just days after Chancellor Jeremy Hunt implored entrepreneurs to come to the country, citing the UK’s position as a “science and technology superpower”.

“When it comes to the innovation industries that will shape and define this century the UK is powerfully positioned to play a leading role,” Hunt said in a speech at Bloomberg.

“In digital technology, we have become only the third economy in the world with a trillion-dollar sector. We have created more unicorns than France and Germany combined with eight UK cities now home to two or more unicorns. The London / Oxford / Cambridge triangle has the largest number of tech businesses in the world outside San Francisco and New York.”

He added: “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.”

“Dreadful move”

Yet axing Tech Nation could be seen as a blow to startups, with successful alumni who passed through its doors including the likes of Monzo, Revolut, Depop, Darktrace, Ocado, Skyscanner, Deliveroo and Bloom and Wild, who spoke to TI last year.

Other nations, such as the US and France, have taken major steps in recent months to encourage tech investment. President Joe Biden’s US Inflation Reduction Act includes up to $369 billion in incentives and subsidies for tech investment. In France, nation bank Bpifrance has announced €500 million in cash for deep tech startups.

Doopoll CEO Steve Dimmick used Twitter to decry the switch of funding to Barclays, calling it a “dreadful move” and warning the banking giant could grab a “monopoly over new fintech talent and start ups”.

More than 400 entrepreneurs signed an open letter decrying the move. The letter, organised by Coadec, warned the shift to Barclays “risks throwing out the baby with the bathwater – and in this moment of crisis, the message this sends about what government thinks of the sector is damning”.

“Startups and scaleups have been and should be the drivers of the British growth story in the years to come – in order to reach the ecosystems full potential – we ask that you provide the help and support we need.”