The UK government-backed organisation for supporting tech start-ups, Tech Nation, will close its doors to entrepreneurs next week (31st March, 2023) at a time when funding for start-up in the UK drops for the first time in a decade.
The UK’s Department of Culture Media and Sport (now the Department for Science, Innovation and Technology) withdrew Tech Nation’s grant funding which saw the organisation lend support to scale-ups during decade long period of growth in the UK’s tech sector.
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The closure comes at a time when funding for start-ups in the UK has seen a significant drop, according to research analyst GlobalData. Venture funding peaked at $2.7bn in 2021, dropping to $1.78 in 2022 after a decade of sustained growth, during which Tech Nation helped many companies to become household names such as Monzo, Revolut and Deliveroo.
Tech Nation’s closure comes as the UK start-up community is still reeling from the collapse of Silicon Valley Bank (10th March, 2023), and contending with the double headwinds of shrinking global VC funding and challenging macroeconomic conditions.
Richard Dana, founder and CEO of tech-focused mortgage broker, Tembo, says that the innovation economy should be at the centre of improving the UK's economic prospects, "but the signs from government are anything but supportive - having tightened the R&D tax credit scheme and now redirected funds from one of the tech-scene's big success stories."
While it is said that 9 out of 10 start-ups fail within their first 2.5 years, Tech Nation has claimed that 95% of start-ups on the organisation’s accelerator programs have gone to scale.
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By GlobalDataIn February 2023, UK prime minister Rishi Sunak removed responsibility for the UK's technology industry from the Department of Culture Media and Sport to a dedicated Department for Science, Innovation and Technology.
Mike Rhodes, CEO and founder of UK start-up, ConsultMyApp, says the while the launch of the Department for Science, Innovation and Technology demonstrates some level of commitment towards the sector from the Government, Tech Nation offered a government-backed ‘not-for-profit’ that had the UK's start-ups at the heart of every decision it made and every penny it invested.
“The UK tech industry needs a Tech Nation now more than ever. Whilst innovation remains consistently high, entrepreneurs and startup leaders need support both financially and educationally so they know how to tackle the issues facing them, whether that's a likely incoming recession or the ongoing cost-of-living-crisis,” Rhodes told Verdict.
CEO and founder of production company ARK Immersive, Matt Littler, makes the point that every big business was a start-up at some point. "If the UK wants to foster growth in the tech sector, then we need to incubate SMEs as they come of age in this competitive market," Littler told Verdict.
According to Tech Nation, more than a third of all tech unicorns and decacorns created in the UK have graduated from a Tech Nation program, collectively raising over £28bn in funding. The organisation’s activities included growth programs, a digital academy, conferences, international expansion programs, sandboxes, panels and sector research.
Tech Nation’s alumni include includes Monzo, Revolut, Depop, Bloom & Wild, Just Eat, Darktrace, Marshmallow, Ocado and Deliveroo amongst the 5000 businesses the organisation has helped scale up.
