Where now for ambitious tech?

What do neobanks Monzo, Revolut and OakNorth, financial management app Wealthsimple, trading platform eToro, credit and fraud analyst Trade Ledger, and insurtechs Marshmallow, ManyPets and Zego, have in common? OK, so they’ve all featured in these pages – well spotted, loyal readers. The majority of them are unicorns, you’re right. And yes, they all started in the UK. But beyond that?

If you’re a Tech Nation alumni or one of the many talented and committed individuals who helped the not-for-profit growth accelerator stamp success on more than 4,000 startups and scaleups over a period of eight years, you’ll know the answer.

The Tech Nation concept was one of David Cameron’s ideas as Prime Minister. It was both a statement of the UK’s ambition to reposition itself as a new technology-led economy and an interactive data project to track the growth of digital businesses and where clusters of them were emerging.

When Tech Nation took physical form as the result of a merger between Tech City UK, based in London, and Tech North, it chose Manchester as its base – a signal that this was an economy-driver that everyone could steer, not just from the capital.

According to a 2023 report, compiled by FinTech North, Whitecap Consulting and others, the Greater Manchester fintech sector is now the largest ecosystem for the industry outside of London. It’s home to around 150 fintech firms, the vast majority of them startups and scaleups, whose number has trebled over the last three years. Starling Bank moved into the city this year, joining BankiFi, Adyen, Worldpay, Ebury and Xero, among others. Manchester Met University is the first provider of a fintech masters course in England.

While it contributed hugely to propelling the UK into the top three global destinations for tech investment, Tech Nation embedded itself in the regional economy and created a halo effect that helped to convince founders they didn’t need to be in London. The proven benefits of having a more geographically diverse tech sector have been demonstrated.

In 2014 there were just four places in the UK where you could spot a tech unicorn grazing; now there are populations of them in 20 or more locations.

More than a third of those stellar-growth companies graduated from a Tech Nation programme; collectively they raised more than £28.1billon in venture capital and on capital markets. While 80 per cent of startups fail within two to five years, more than 95 per cent of those that went through Tech Nation programmes successfully scaled – that is an outstanding statistic. Bang for bucks, the organisation delivered.

But Tech Nation was the victim of a curious funding decision last year. During Liz Truss’ short and economically disastrous term as PM, the government decided to give an annual £12million that Tech Nation relied on to Barclays Bank to work with startups and scaleups through its Eagle Labs. The decision was widely condemned by founders and VCs – comments ranged from ‘baffling’ to ‘anti-competitive’.

The sense of bewilderment (and genuine sadness) was still evident six months later at Tech Nation’s valedictory event in March to present the last of its annual reports. This one was a bit different: it was leaving behind a roadmap for how the country could sustain conditions for growth now Tech Nation was exiting.

The current economic climate does not work in founders’ favour, and the UK tech ecosystem was at an inflection point –‘either the bubble risks being burst, or future growth can be promoted, and augmented’, it said. If anything, now was the time to double down on mentoring startups and scaleups to make them investment ready and facilitate those introductions. But, as one VC commented, with the decision to effectively pull the plug on Tech Nation, ‘the idea of government as a provider of startup advice to founders backed by Tier 1 VCs is finished’.

It’s now emerged that global entrepreneur network, VC-backed Founders Forum Group has acquired Tech Nation. But there’s still no explanation for the decision to leave the organisation stranded. And what does it say about government’s commitment to building a true tech nation?