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Traffic passes around the Old Street roundabout, also referred to as “Silicon Roundabout,” in the area known as “Tech City” in London, U.K.
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Tech Nation, the U.K. startup accelerator program, is set to close its doors after failing to renew its funding from the government, the organization said Tuesday.
The tech industry body said in a statement that it will be “ceasing all existing operations through a carefully planned wind-down and has commenced a redundancy consultation process.”
The group is “actively seeking interested parties to acquire its portfolio of assets to take forward in a new guise,” it added.
Created in 2010 under the premiership of ex-Prime Minister David Cameron, Tech Nation was a hallmark of the U.K.’s bid to create billion-dollar tech companies of global significance and rival the likes of Silicon Valley.
It claims to have helped produce household names in the U.K.’s tech scene, with a diverse range of alumni on its projects hailing from the likes of Monzo, Revolut, Deliveroo, Just Eat, Darktrace and Ocado.
According to Tech Nation, more than a third of all tech unicorns and decacorns created in the U.K. graduated from a Tech Nation program. Tech Nation graduates have also raised more than £28 billion ($35.4 billion) in funding to date.
While 80% of startups fail in their first two to five years, over 95% of startups on Tech Nation’s accelerator programs have gone on to scale, the group said.
Earlier this month, the Department for Digital, Culture, Media and Sport awarded its £12.09 million Digital Growth Grant to Barclays Bank. The lender’s Eagle Labs incubator, which operates independently of Barclays, is set to replace Tech Nation as the recipient of the grant.
The government put the contract out to tender last year after raising concerns that Tech Nation was in breach of state aid rules after failing to become “self-sufficient,” The Sunday Times reported.
Tech Nation says the DCMS grant accounted for roughly 62% of its funding in 2021/22. The remainder of its income came from sponsorship, commercial partnerships and other government contracts.
As a result of the move, Tech Nation said its current activities were “not viable on a standalone basis” and would therefore need to be wound up.
For employees whose primary role is government delivery work, Tech Nation has begun discussions with Barclays Bank about transferring those workers over to the lender.
The Home Office has also been notified of the move and its visa program for foreign tech workers “will continue in the immediate term,” Tech Nation said.
“We have supported Tech Nation since 2017 to accelerate the growth of startups and scaleups across the UK,” A DCMS spokesperson told CNBC via email.
“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 scale-ups over the next two years, and was scored highest by an independent panel.”
The DCMS spokesperson added: “We are committed to supporting Tech Nation until March 2023.”
The next Silicon Valley?
The move has raised questions over the U.K.’s ambitions to rev up its digital leadership on the global stage following its exit from the European Union. Just days ago, Finance Minister Jeremy Hunt had talked up the U.K.’s chances of becoming the “world’s next Silicon Valley.”
“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,” Martha Lane Fox, founder of lastminute.com and currently president of the British Chambers of Commerce, said in a statement Tuesday.
“The skills they’ve equipped entrepreneurs with and opportunities they’ve created have been second to none. They will be missed.”
It also adds to the woes of the U.K.’s tech sector, which is currently reeling from a global slump in venture capital funding amid fears of an oncoming recession.
On Tuesday, the International Monetary Fund said the U.K. was the only nation among all advanced economies on track to contract in 2023. Even sanctions-hit Russia is forecast to grow.
“The UK tech ecosystem has today lost an important member of its community,” said Russ Shaw, founder of Tech London Advocates, the U.K. tech network.
Total VC funding to startups in the U.K. totalled $29.9 billion in 2022, down 27% from $41 billion a year earlier. Global startup investment sank to $233.3 billion, down 33% from $359.6 billion in 2021.
