Traffic flows around Old Street Roundabout, also known as ‘Silicon Roundabout’, in the area known as ‘Tech City’ in London, UK
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Tech Nation, the UK’s startup accelerator program, is set to close its doors after failing to renew government funding, the organization said on Tuesday.
The technology industry body said in a statement that it is “ceasing all existing operations through a carefully planned wind-down and has begun a redundancy consultation process”.
The group is “actively seeking interested parties to acquire its portfolio of assets to move forward in a new way,” he added.
Created in 2010 under the leadership of former Prime Minister David Cameron, Tech Nation has become a hallmark of Britain’s drive to create billion-dollar technology companies of global significance and compete with the likes of Silicon Valley.
He claims to have helped create big names in the UK tech scene, with various alumni of his projects such as Monzo, Revolut, Deliver, Just Eat, A dark trail and Akada.
According to Tech Nation, over a third of all tech unicorns and unicorns created in the UK have graduated from the Tech Nation programme. Tech Nation alumni have also raised more than £28 billion ($35.4 billion) in funding to date.
While 80% of startups fail in the first two to five years, more than 95% of startups in Tech Nation’s accelerator programs have scaled, the group reports.
Earlier this month, the Department for Digital, Culture, Media and Sport awarded a £12.09m Digital Growth Grant to Barclays Bank. The lender’s Eagle Labs incubator, which operates independently of Barclays, is to replace Tech Nation as a grant recipient.
The government put the contract out to tender last year after raising concerns that Tech Nation was breaking state aid rules after failing to become “self-sufficient”, according to The Sunday Times.
Tech Nation says the DCMS grant accounted for approximately 62% of its funding in 2021/2022. The rest of the revenue came from sponsorships, commercial partnerships and other government contracts.
As a result of the move, Tech Nation said its current operations are “not viable on a stand-alone basis” and should therefore be wound down.
For employees whose primary role is government work, Tech Nation has begun negotiations with Barclays Bank to transfer those workers to the lender.
The Home Office has also been notified of the move, and its visa program for foreign tech workers “will be extended in the near future,” Tech Nation reported.
“We’ve been supporting Tech Nation since 2017 to accelerate startup growth and scale across the UK,” a DCMS spokesperson told CNBC via email.
“Our decision to make the Digital Growth Grant competitive brings the funding in line with most government grants. Barclays Eagle Labs was successful because their application represented the best value for money for taxpayers, benefited the most startups and companies scaling up over the next two years, and was awarded the highest score by an independent peer review panel.”
A DCMS spokesperson added: “We are committed to supporting Tech Nation until March 2023.”
The next Silicon Valley?
The move has cast doubt on Britain’s ambitions to strengthen its digital leadership on the world stage after leaving the European Union. Just a few days ago, Chancellor of the Exchequer Jeremy Hunt spoke of Britain’s chances of becoming “the next Silicon Valley of the world”.
“As an entrepreneur and champion of digital technology, I have witnessed first-hand the impact that Tech Nation has had on creating one of the most exciting and dynamic parts of our economy.” – Martha Lane Fox, founder of lastminute.com and current president This is said in a statement from the British Chambers of Commerce on Tuesday.
“The skills they’ve given entrepreneurs and the opportunities they’ve created are unparalleled. They will be missed.”
It also adds to the woes of the UK tech sector, which is currently suffering from a global slump in venture capital funding amid fears of a looming recession.
The International Monetary Fund said on Tuesday that Britain is the only advanced economy likely to contract in 2023. Even sanctions-hit Russia is projected to grow.
“The UK tech ecosystem has lost an important member of its community today,” said Russ Shaw, founder of UK technology network Tech London Advocates.
Total venture capital funding for UK startups in 2022 was $29.9 billion, down 27% from $41 billion a year earlier. Global investment in startups fell to $233.3 billion, down 33% from $359.6 billion in 2021.