Tech Nation, the UK industry body created to champion the sector during the height of the “Silicon Roundabout” tech boom in London, has been forced to close down after the government withdrew its funding.
The body, set up by the coalition government in 2014, was given responsibility to promote the country’s digital industry, from leading “growth programmes” for tech start-ups to processing visa applications for overseas staff of tech companies.
On Tuesday, Tech Nation said the government’s decision to take away crucial funding that forms the majority of its revenues meant that it could no longer continue. The £12mn Digital Growth Grant was this month given to Barclays Bank after a competitive tender. Barclays’ Eagle Labs unit delivers growth programmes, business mentoring and events.
Tech Nation said that “as a direct result of the DCMS grant withdrawal . . . Tech Nation’s remaining activities are not viable on a standalone basis”.
The Digital Growth Grant was awarded following an open competition and rigorous assessment process, according to the government.
It added that the Barclays 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”.
But the decision has been greeted with dismay by many British entrepreneurs, with the group seen as an important supporter for a sector now facing one of its worst crises for two decades.
The government-backed group had a mission of boosting small and scaling tech businesses in all corners of the UK. It has overseen operations such as a growth programme for start-ups, alongside digital academies, networking conferences and international expansion programmes to help boost UK tech since 2014.
Martha Lane Fox, the co-founder of lastminute.com and president of the British Chambers of Commerce, said: “As an entrepreneur and digital champion, I’ve witnessed first-hand the impact that Tech Nation has had in creating one of the most exciting and dynamic parts of our economy. They will be missed.”
Chancellor Jeremy Hunt has said that he wants to make the UK the next Silicon Valley, although some in the tech sector question whether the government has matched its ambitions with policies to support growth such as financial and regulatory incentives.
Tech Nation defended its record said that more than 95 per cent of start-ups from its accelerator programmes had moved to next stages of funding, while more than a third of all UK tech “unicorns” — companies valued at more than $1bn — had been linked to a Tech Nation programme.
This includes Monzo, Revolut, Depop, Bloom & Wild, Zilch, Just Eat, Darktrace, Marshmallow, Ocado, Skyscanner, Peak AI and Deliveroo.
Tech Nation said that as a non-profit organisation, it could not “continue to deliver for scale-ups impactfully and impartially without core public funding underpinning everything we do, and with commercial funding alone”.
Tech Nation has commenced a redundancy consultation process, and is seeking interested parties to acquire its portfolio of other assets.
Ron Kalifa, author of the Kalifa review of UK fintech for the Treasury and former chief executive of Worldpay, said: “Having Tech Nation lead the national connectivity chapter of the review was hugely impactful as it brought together several different constituents, from founders to academics and from investors to ecosystem regional leaders.”