Startup founders go to war with UK government over move to appoint bank to key role in ecosystem

Nothing short of a war has broken out between an influential section of the UK tech startup community and the British government after the latter allegedly attempted to devolve the management and promotion of British startups – both in the UK and abroad – to a single UK bank.

As we discussed earlier, A technological nation – a ‘QUANGO‘, which for many years was tasked with being the UK’s government-backed ‘start-up champion’ – was bidding for an ongoing £12m contract from March 2023. But it was put out to tender by the Department for Culture , media and sport and sources claim that the contract was ready to be awarded to banking giant Barclays Bank for the sole performance of the role. The move was described as “crazy” and “insane” by some key players in the UK TechCrunch industry I spoke to.

now, an open letter signed by over 60 startup founders and other key playerswas published by Digital Economy Coalition (Coadec), an independent not-for-profit organization campaigning for policies to support digital start-ups in the UK.

The letter calls on the government to commit to maintaining the role of Tech Nation, a role it fulfills under various guises since September 2011.

If the move goes ahead, the 60+ group claims, Barclays will be responsible for a number of critical services for start-ups, such as visa sponsorship and applications for overseas staff, as well as the external promotion of the UK start-up ecosystem globally . Coadec claims this could put it in a conflict of interest on a number of fronts.

The signatories of the letter are highly influential in the UK tech scene. They include Brent Hoberman (co-founder and chairman of Founders Forum), Taavet Hinrikus (co-founder and chairman of Wise), Tessa Clark (co-founder and CEO of OLIO), Aaron Gelbard (co-founder and CEO of Bloom & Wild), Alex Depledge (Founder and CEO of Resi) and Ali Parsa (Co-Founder and CEO of Babylon Health).

Due to the alleged moves to hand over the contract to Barclays, the group claims that this could put current services for start-ups as a whole (including the visa system and promotional work) at risk; would transfer a key aspect of government support to a bank that has Tech Nation’s long history in the ecosystem; and argued that any new arrangements should “add support to the startup ecosystem, not take away from it.”

In a statement, Dom Halas, chief executive of Coadec, said the government’s move would mean it would “step back” from the tech startup ecosystem, rather than retain a close interest. It would also be in stark contrast to the ruling Conservative Party’s oft-repeated line that it is “pro-business”.

“Amid economic turmoil, startup founders need help more than ever. This means that the government is more supportive of the ecosystem rather than pulling back. We want to ensure that if support changes occur, the things startups value most, including the dedicated technology visa system, are protected,” Halas said in a statement.

TechCrunch has reached out to DCMS for comment and will update this story with their response.

• Declaration of interest: Coadec was founded in 2010 by Jeff Lin, executive chairman and co-founder of the online investment platform Seedrs, and myself (Mike Butcher, editor-in-chief of TechCrunch, although I no longer have any formal or informal involvement).

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