Tech Nation, the UK startup organisation that helped bring thousands of talented tech workers to the UK, has announced that it will cease operations in March after the UK government pulled key funding.
Tech Nation has worked with nearly a third of the country’s 122 unicorns since 2011 and ran the UK’s global tech talent visa. Though it was never a government organisation, Tech Nation was a key player in advancing the nation’s agenda to become a global startup hub and its existence depended on government funding.
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.
That decision was confirmed this month, and Tech Nation will now cease operations at the end of March. Without the government grant funding, Tech Nation — a non-profit — cannot fund its accelerators, reports or visa programmes, it said in a statement.
“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.”
What happens now
Barclays’ tech incubator Eagle Labs will use the government grant — which has been awarded for just two years — to launch new programmes to help tech companies. Eagle Labs has worked with startups across the UK since 2015.
It will not, however, take over Tech Nation’s role administering the UK’s global talent visa. Tech Nation has notified the UK's Home Office that its visa scheme will stop — though it will continue until then. The talent visa programme — known as the Global Talent Visa — was designed to help founders and tech workers to move to the UK to start and join high-growth businesses. More than 3,000 people have been endorsed through the scheme.
"We have worked around the clock to try to secure our future," Tech Nation tells Sifted. That included asking the UK government to consider turning Tech Nation into a public institution — an arm's-length state body — so it could continue working for the UK tech ecosystem and scaleups. "While we had a number of discussions on that topic, the government was unable to make a commitment."
As a result, Tech Nation has begun redundancy proceedings for all its 70 permanent employees, though up to 48 people whose primary role is DCMS delivery work may stay on to continue the work with Barclays.
Tech Nation says it is also exploring options to sell its assets, which include its growth programmes, research and databases.
A DCMS spokesperson said: "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 scaleups over the next two years, and was scored highest by an independent panel."
A spokesperson from the Home Office, which funds the Global Talent visa, said: "We are working closely with Tech Nation to ensure applications for the Global Talent route are unaffected during this period, whilst we explore the long-term changes necessary so the UK can continue to benefit from the brightest and best living and working here.”
The controversy
UK founders are not, broadly, behind the move to award the grant funding to a commercial company.
More than 400 entrepreneurs have signed an open letter calling on the government to rethink its decision to award the grant to Barclays.
“I'm absolutely *incensed* by the rumours that the Govt contract to support UK #startups might be taken away from Tech Nation and given to a large commercial bank,” climate tech founder Tessa Clarke posted on LinkedIn in November.
“I'm sure #climatetech founders will not be happy (fossil fuel funding). And I can't imagine #fintech founders will be that happy either.”
“It's hugely sad to see the end of Tech Nation today. I was on the very first Upscale programme, and since inception we've seen a dramatic growth in the UK startup community with a credible and effective cheerleader and ecosystem agent at its back,” says Tom Adeyoola, founder of Metail.
“It wasn't perfect by any means, but you're only as good as your paymasters and objectives drive you to be. I'm not sure it has been made clear what Tech Nation in particular were failing at that changing a supplier will fix. Whilst I believe strongly in competition and positive change, I think we should reflect on a grant cycle that is incredibly short and precarious. Barclays Eagle Labs may well have only just got their infrastructure in place by the time they are themselves up for renewal.
“A lot of relationships and connective ecosystem tissue are being thrown away at a time when UK plc is desperately seeking growth. I hope the new regime can get up to speed fast for the sake of the scaleup community and our global economic prospects.”
The Tech Nation legacy
Tech Nation, which launched in 2011, ran dozens of accelerator programmes designed to help UK startups and scaleups grow and expand internationally.
Alumni include many of the UK’s startup stars — such as Monzo, Revolut, Depop, Darktrace, Ocado, Skyscanner and Deliveroo.
It has launched programmes specifically catering founders from ethnic minority backgrounds and climate tech founders. British entrepreneurs say their loss will be felt.
Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast, and writes Up Round, a weekly newsletter on VC. She tweets from @amyrlewin
Freya Pratty is a senior reporter at Sifted. She tweets from @FPratty and writes our climate tech newsletter — you can sign up here.
Amy O'Brien is a reporter at Sifted. She tweets from @Amy_EOBrien and writes our fintech newsletter — you can sign up here.
This article was updated on 31 January to add a statement from DCMS, and updated again on 2 February to add a statement from the Home Office.