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TechNation is in second place in the race to remain the UK’s government-backed ‘startup champion’ after bidding for its £12m contract, TechCrunch sources have revealed. First on the line in this period – the decision will be presented in December – is the banking giant Barclays. Tech Nation’s government funding runs until March 2023.
But the prospect of a lucrative and global bank taking over the contract has been called “crazy” and “crazy” by some UK industry players.
Over the weekend, The Sunday Times reported that government officials feared TechNation was “breaching government aid laws by failing to be self-sustaining,” prompting officials to put the contract out to tender earlier this year.
However, the Times reports that TechNation has lost the deal, but TechCrunch understands that a final decision has not yet been made. Furthermore, it is understood that TechNation intends to continue ‘as is’ even without government subsidies, with funding from sponsors, subscriptions and partners.
Barclays applied for the contract through Eagle Labs’ network of incubators, some of which have physical locations, but most do not.
If this is rectified as it seeks to grow more startups outside of London, a national presence is thought to be helping to encourage the government in its so-called “scaling up” agenda.
If successful, Barclays could manage the Home Office’s digital visa scheme, although it is unlikely to have a monopoly on this.
Again, it was wrongly reported that TechNation would lose this capability. The £12m funding and the visa scheme are essentially separate issues, and the final government decision will have no impact on TechNation’s role in supporting the Global Talent visa, which has been designated by the Home Office.
Tech Nation has long been involved in the UK tech startup scene. His predecessor, Tech City UK, It was launched in 2011 by former Prime Minister David Cameron and focused on the London ecosystem until 2018 when it merged with Tech North (based in Manchester). It has since run a number of programs that connect tech start-ups with each other and with investors in the UK and abroad.
The non-profit is run by Lord (Joe) Johnson (Boris Johnson’s brother) and former Sage boss Stephen Kelly.
TechNation chief executive Gerard Grech said the body’s work “returns £15 for every £1 the government invests”.
In a statement he told me: “We’ve supported over 4,000 tech companies across the UK, with over 30% of the UK’s 122 tech unicorns (eg Monzo, Darktress) graduating from the Tech Nation program (49 in total). 44% of UK decacorns have graduated from TN’s Accelerated Development Program (failure rate so far is less than 5%).
“Hundreds of tech companies, in partnership with companies like Mozo and Olio, have signed up to the TechZero Pledge, which brings tech companies to NetZero. Our Libra Growth program shines a light on founders and leaders from underrepresented communities, and we recently launched to help tech founders develop a more diverse workforce.” It’s a diversity and inclusion toolkit,” he said.
“Today, TechNation’s work represents a return of £15 for every £1 invested by the UK government. This is one of the best ROIs for the taxpayer in this strategic growth area of the economy,” he said.
TechNation’s recent annual report says it could remain a concern if government funding is cut.
The industry has reacted with dismay that a giant international bank has been given sole responsibility for supporting the UK’s tech start-up ecosystem.
A source told CTAM that the move would be a conflict of interest, saying the bank should support startup programs in the fintech space, saying the move is “like letting an arsonist teach kids about fire safety.”
Another said the government “effectively handed over Barclays’ money to acquire new customers” and was “a competitor or customer of the start-up intended to support”.
One investor who spoke to me on condition of anonymity said the government’s decision to question TechNation’s funding was “crazy”.
“It’s crazy. We must forget this. We can’t hand over the support to the technology ecosystem to a bank now! Everyone should know how crazy this is,” he said.
Another VC told me the decision to put Barclays at the forefront of the relationship “followed President Bush’s declaration of ‘mission accomplished’ after the Gulf War, before the war was over.” I don’t know what the government is thinking. I suspect this new government cares more about banking and financial services than technology.
Brent Hoberman, founder of LastMinute.com and now head of First Minute Capital, commented on LinkedIn.[I] They were fans of Tech Nation and fans of their dedication and impact and creativity in expanding their role. It’s hard work and the scrutiny that comes with government funding makes it especially difficult to try. Barclays needs to find the ability to make more impact and scale.
Ian Merricks, White Horse Capital managing partner and chairman of the Accelerator Network and rival bidder for the TechNation contract, said: “It’s hard to be more outraged about this use of public business growth support funds. I think the ‘winners’ have a bigger lobbying function than us as a private sector association.
Tanya Suarez, Founder and CEO | IoT Tribe, commented: “Obviously this gives an unfair advantage and can be used to influence the choice of banker founders at different stages of development. I wouldn’t be happy if I were a UK high street bank or any other financial institution that has been supporting founders for years. Forgetting.” No, Barclays has net operating income of £22bn and profits of £7bn in 2021. If they really want to do this, they need to figure out a minute amount of that to cover the £5-6M a year they receive… I don’t think they need funding to do that.
Nicola Bates, head of global accelerators and innovation programs at Boeing, said: “I don’t see how this makes sense for Barclays or the ecosystem. At £12m it would probably cost more to bid for Barclays. But is this really a job they (and should) be doing – without needing government money?
Grech said the decision rests with DCMS.
A DCMS spokesman said: “No final decisions have been made. A successful grant recipient will be notified in due course.
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