UK startup accelerator program Tech Nation is set to close after failing to renew funding from the government, the organization said on Tuesday.
“Through a carefully planned winddown, we have ceased all existing operations and initiated a redundancy consultation process,” the technology industry association said in a statement.
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The group added that it was “actively seeking interested parties to acquire a portfolio of assets to move forward in a new way.”
Founded in 2010 under former Prime Minister David Cameron, Tech Nation has been a hallmark of British attempts to build billion-dollar technology companies of global significance, rivaling the likes of Silicon Valley.
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According to Tech Nation, over a third of all tech unicorns and decacons created in the UK have graduated from Tech Nation programs. The Tech Nation alumni has raised over £28 billion ($35.4 billion) to date.
80% of startups fail in the first 2-5 years, but over 95% of startups participating in Tech Nation’s accelerator program scale.
Earlier this month, the Department for Digital, Culture, Media and Sport awarded Barclays Bank a £12.09 million digital growth grant. Lender Eagle Labs Incubator, which operates independently from Barclays, will replace Tech Nation as the recipient of the grant.
The government last year put the contract up for auction after Tech Nation raised concerns it was violating state aid rules after failing to be “self-sufficient,” The Sunday Times report.
According to Tech Nation, DCMS grants account for about 62% of funding in 2021/22. The rest of the income came from sponsorships, commercial partnerships and other government contracts.
As a result of the move, Tech Nation said the current activity “is not viable on its own” and needs to be put in order.
Tech Nation has entered into talks with Barclays Bank to turn over employees whose primary role is in government delivery operations to lenders.
The Home Office has also been notified of the move, and the visa program for foreign engineers “will continue for the time being,” Tech Nation said.
A DCMS spokesperson told CNBC in an email:
“Our decision to make the Digital Growth Grant competitive will align the funding with the majority of government funding. Barclays Eagle Lab believes their application is the best for taxpayer money. It was successful because it represented value and benefited most startups and scale-ups, and was top-scored by an independent panel over the next two years.”
A DCMS spokesperson added, “We are committed to supporting Tech Nation through March 2023.”
The next Silicon Valley?
The move calls into question the UK’s ambition to revive its digital leadership on the global stage after leaving the European Union. Just a few days ago, Chancellor of the Exchequer Jeremy Hunt said the UK would “The world’s next Silicon Valley. ”
“As entrepreneurs and digital champions, we have witnessed first-hand the impact Tech Nation has had in creating one of the most exciting and dynamic parts of our economy,” said lastminute.com founder, Yes, now the British Chamber of Commerce said in a statement on Tuesday.
“The skills they equip entrepreneurs with and the opportunities they create are second to none. They will be missed.”
It also contributes to the woes of the UK tech sector at a time when venture capital funding is sluggish globally amid looming recession fears.
On Tuesday, the International Monetary Fund Said The UK was the only country among all developed countries on a contraction trajectory in 2023. Even sanctioned Russia is projected to grow.
Russ Shaw, founder of UK tech network Tech London Advocates, said:
Total VC funding for UK startups will reach $29.9 billion in 2022, down 27% from $41 billion the year before. Global startup investment fell to $233.3 billion, down 33% from $359.6 billion in 2021.