Mark Huxley
When the Tech Nation bubble burst... and what's next?
Written by Mark Huxley on
It was just a year ago that the metaphorical champagne corks popped when the news broke that the UK had joined the USA and China as being the only countries to have a tech ecosystem valuation of $1 trillion. No mean achievement given our relative size compared to the other two!

At the time it was lauded by the The Department for Digital, Culture, Media & Sport (DCMS) when UK Government Digital Minister Chris Philp proudly said: “The UK tech industry has gone from strength to strength in the past few years and all this hard work and dedication is paying off now that it’s become the third ecosystem in the world to reach $1 trillion in value. It’s brilliant to see how every tech company in the UK, from early-stage startup to global leading decacorn ($10bn plus valuations), has a part to play in lifting up the ecosystem and making it thrive.”

Gerard Grech, chief executive of Tech Nation, the platform for tech company innovation, chipped in saying: “This is a watershed moment for UK tech. The industry has gone through difficult global challenges and come out stronger than ever. Ten years ago people said there weren’t enough start-ups in the UK. Five years ago people said there weren’t enough scale-ups. Every day, innovative and experimental tech companies are being launched across the UK that will grow into the next generation of unicorns and decacorns.”

A proper shot in the arm

How wonderful on all fronts therefore as the country settled into a post Brexit new-age economy and we all regained some kind of normality post Covid. Albeit its ripple effect had changed the workplace forever, physically, and with the emergence of the so-called "great resignation". We could all look forward to a new dawn of tech prosperity, a perfect levelling up agenda, opportunities abounding for entrepreneurially minded tech start and scale ups to begin their own journeys of hopeful success, ultimately it all creating some much needed positivity in the nation's collective psyche.

Twelve months on and what's happened to Tech Nation?

Move the clock on to a couple of weeks ago and we all woke up to the startling news that the Government had decided to withdraw its grant funding of Tech Nation, instead awarding it to Barclays Bank.

To remind, this is the same Tech Nation spoken about so lovingly last year, founded to a great hue and cry in 2014 that was publicly pitched as pivotal to efforts to create a British start-up scene to rival Silicon Valley. Since time consistently driving UK Plc's reputation as a start up ecosystem and the incubator that saw a significant proportion of unicorns pass through its doors, including Deliveroo, Monzo and Revolut to name but a few.

A more contrite Gerard Grech told the FT in a recent article, reflecting on the government’s stated ambitions to build a “science superpower", “I’m sure [Barclays] will do their best work with the grant, I just think whatever the government says, it must match its own rhetoric with policies and support mechanisms that really, truly help the ecosystem.”

So where does this leave us

The immediate consequence has certainly brought much public commentary and the start of a broader debate. In my own insurance sector Clare Ruel, writing for Insurance Times in an excellent recent article, spoke of the laying off staff in big tech firms like Microsoft, Twitter, Amazon and Meta.

This is of course at the other end of the maturity scale to the myriad of start ups that went through Tech Nation's doors, but Clare goes on in the article to speak of Gallagher Re's latest Global Insurtech report that “early stage funding” for insurtechs has “been slashed in half”. Adding that according to similar figures from GlobalData, the number of venture financing deals in the insurtech sector dipped by 31.6% in 2022.

None of this adds up to any kind of positive outlook as we continue to stare the spectre of recession in the face and wonder how will we escape its clutches.

What's the answer?

There are brains much bigger than mine wrestling with this question, but in my own humble view we have to recognise that for all the reasons already said, the UK is at the pivot point where it really does need to define a new commercial paradigm and figure out what makes us truly distinctive and differentiated.

My own lens is much shaped by the City of London and if I think about its challenges and opportunities, it seems clear to me that as we strive to find a new definition of what makes us great, we have to look into ourselves and recognise that it is our generations old ability as inventors and pioneers that will drive things forward.

The City therefore needs to re-find, fully engage its entrepreneurial spirit and like any entrepreneur, not be frightened of taking some bold steps (dare I say take a risk or two - something sadly lacking in many parts of the City).

The tech sector has clearly shown the benefit of this and I would urge anyone reading this who agrees, to be a bit braver, take some meaningful strides into true innovation and carve out proper research and development funds in their organisations to drive proper innovation harder and further.

The banks and investors are playing their role, but theirs will always lean towards a commerce-based profit motive. Businesses have the ability work in broader ways in both commercial and social entrepreneurship, something that with the E of ESG looming larger all the time, could come to define much of the next decade of tech innovation. How great for a business to be properly on the front foot of this and drive the agenda.

I am truly at a loss to understand the Government's position with Tech Nation and hope that last year's congratulatory rhetoric really does result in them playing their full supporting role and that before long we get to read how we're the first tech nation to hit two trillion dollars!

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