UK incubator Tech Nation to close as grant is handed to Barclays

Government-backed start-up incubator Tech Nation has been forced to shut down after its funding was withdrawn.

Last April, the Department for Digital, Culture, Media and Sport (DCMS) decided to run a competitive tender process for its £12 million Digital Growth Grant. The grant aims to improve access to skills training and advice, and will generally support the UK’s digital and tech sectors over the next two years.

That process concluded last month, when DCMS announced Barclays Eagle Labs as the winner. Tech Nation said that without the grant, its activities are no longer viable.

“The work we do with our accelerator programmes, insights and research reports, the Growth Platform, visa processing for the Home Office, and so much more, has all been built on the foundation of our core grant funding from DCMS,” said Tech Nation earlier this week. “With this foundation removed, Tech Nation’s remaining activities are not viable on a standalone basis and the unique Tech Nation model that we have built upon this foundation can no longer be supported.”

A redundancy consultation process is already underway, and it is looking for buyers for all of its assets. Operations will cease on 31 March when its current contract with DCMS expires.

Tech Nation began during the 2010s under the coalition government, which wanted to support the continued growth of Tech City, also known as Silicon Roundabout.

Looking at its track record, it has comfortably delivered on its promise. More than a third of UK tech unicorns and decacorns (companies valued at more than $10 billion) are graduates of a Tech Nation programme, collectively raising more than £28 billion in external investment. These companies aren’t all concentrated in London either, with 20 locations across the UK boasting one or more unicorns. Alumni include household names like Just Eat, Deliveroo, Ocado, Skyskanner, Monzo and Revolut, among others.

Today, according to Tech Nation, the UK tech sector is valued at $1 trillion, making it the largest digital economy in Europe, and the third-largest in the world. It employs 4.8 million people. In addition, for every £1 of government funding, Tech Nation’s activities contributed £15 to the UK economy.

“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,” said Martha Lane Fox CBE, president of the British Chambers of Commerce, in a statement. “The skills they’ve equipped entrepreneurs with and opportunities they’ve created have been second to none. They will be missed.”

Meanwhile, Barclays said its newly-secured grant will fund training resources and opportunities for entrepreneurs, including a learning management system providing virtual training to over 10,000 businesses, and training modules targeted at young, aspiring entrepreneurs.

Barclays Eagle Labs was of course perfectly entitled to apply for the grant; after all, there must have been some vetting as part of the application process to make sure it was eligible.

It nonetheless seems counter-intuitive that the start-up incubator division of one of the world’s largest banks should be favoured over an outfit like Tech Nation. An outfit that has hit the skids within weeks of missing out on £12 million, which incidentally equates to around 0.17 percent of Barclays’ net income in 2021.

Barclays would no doubt defend itself by saying Eagle Labs is distinct from the banking side of the business. It might use terms like ring-fenced, perhaps even a cheeky firebreak here and there. But there’s no escaping the fact that Eagle Labs originates from when Barclays started repurposing unused space in its local bank branches for so-called Digital Eagles to teach people how to use online services. It might be distinct now, but Eagle Labs’ roots stem from the bank.

“Through the Digital Growth Grant, we’re excited to double down to reach more businesses across the country with our best-in-class business growth programmes and bespoke regional support,” said Amanda Allan, director of Barclays Eagle Labs. “We have a track record of supporting over 8,000 start-ups and high-growth businesses since we launched in 2015 and we’re proud that, due to our established Eagle Labs network, we can pass through all grant funds to our delivery partners and programmes, helping to maximise the impact of the grant in supporting the UK tech ecosystem.”

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