Barclays Eagle Labs has officially been awarded a £12.09m government grant to support UK tech startups in a significant but widely expected blow to Tech Nation.
The Digital Growth Grant was established to deliver support services to the UK’s digital tech sector, grow regional support networks and help entrepreneurs scale their businesses.
The funding, which will be split over two years, was awarded through an open competition and assessment process.
Barclays, a FTSE 100 company, applied through its Eagle Labs incubator, which launched in 2015 and has been gaining momentum in the UK’s tech ecosystem.
It means that entrepreneur network Tech Nation will lose out on a significant part of its funding. Tech Nation was first launched in 2011 and created in its current form in 2018 by the merger of Tech City UK and Tech North.
“Eagle Labs’ vision is to make the UK tech sector an engine for growth and for the UK to be the best place in the world to start and grow a tech business,” said Amanda Allan, director of Barclays Eagle Labs.
“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.”
The official announcement confirms a story by the Sunday Times in September 2022 that Barclays Eagle Labs was in line to receive the public funding.
The decision has proven controversial among the UK’s tech startup community. More than 140 tech founders, executives and investors signed an open letter to the government raising concerns and arguing that the government funding should be awarded to an organisation “grounded in the startup ecosystem” and “not looking to ride on its coattails”.
A statement from the Department for Digital, Culture, Media and Sport said that the Barclays grant is expected to benefit more than 22,000 businesses, with “at least” 80% of those based outside of London.
“We want to unlock the potential of the next generation of start-ups and scale-ups and boost tech businesses in all corners of the country,” said Paul Scully, minister for tech and the digital economy.
“Barclays Eagle Labs are digital industry experts and will help tens of thousands of tech firms and founders to achieve their dreams and create jobs and economic growth.”
In a statement, Tech Nation said: “In anticipation of the government’s decision to award the Digital Growth Grant to another party, we have been working around the clock to secure our future and continue delivering for UK scaleups.
“It is essential that any route forward for Tech Nation ensures we are able to continue to act in the best interest of the tech community and put the needs of scaleups front and centre. This is the principle that has always guided us, and will guide our decision-making over the next steps we take from here.”
Tech Nation left with funding hole
The decision means Tech Nation faces a funding shortfall that it will need to fill through commercial revenue or private funding.
Approximately 75% of Tech Nation’s revenue comes from government grants, with the DCMS funding comprising a significant portion of that.
Tech Nation will continue to receive DCMS funding until March 2023, after which it is set to lose out on £6m a year for two years. Company filings show Tech Nation expects to “maintain a sufficient cash balance” to meet financial obligations should it lose the DCMS grant.
Tech Nation has played a key role in helping the UK’s tech sector grow into a trillion-dollar industry, supporting more than 5,000 tech companies in their growth. The not-for-profit says that it provides a £15 return on investment for every £1 investment in public funding.
Barclays Eagle Labs has a network supporting businesses across 38 physical sites around the UK, including Aberdeen, Belfast, Cumbria and Cardiff.
Labour MP Darren Jones said: “Odd decision to move government funding from Tech Nation to Barclays Bank, which probably doesn’t need taxpayer support. Tech Nation has played an important role supporting startups, and plays a crucial role in making the best use of the (undersubscribed!) global talent visa.”
Dom Hallas, executive director of Coadec, said: “Leaving aside whether Barclays are the right people to be doing this – and whatever you think of Tech Nation. There are now big questions about what comes next – in particular the future of the Tech Nation visa.”