How to Expand a Scaleup Ecosystem: Lessons Learned from Tech Nation

Tech Nation, a trailblazing organization that nurtured startups and accelerated scaleups throughout the U.K., played a pivotal role in spreading tech entrepreneurship beyond the confines of London. From its incorporation in 2014 to its March 2023 acquisition by Founders Forum, Tech Nation accelerated over 1,300 companies by identifying exceptional talent, facilitating access to funding, promoting global reach, and advocating for supportive government policies. The insights gained from this extraordinary journey remain relevant and have the potential to influence how policymakers around the world support their local startups and scaleups.

The Importance of Fostering a Nationwide Scaleup Ecosystem

Founder and former Chief Executive of Tech Nation, now advisor to the Founders Forum Group, Gerard Grech established the organization after identifying a critical gap in the U.K. ecosystem. According to Grech, the mission of the government-backed organization was to ensure nationwide access to the resources that scaleups require. “Ultimately, the goal was to make sure that there were successful leaders in all parts of the United Kingdom,” he says.“We built a national network of entrepreneur engagement managers — people who are really good at spotting companies and helping them get into our growth programs.”

This is where former Client Engagement Director Elizabeth Scott comes in. “Having hands-on programs and accelerators open to people nationwide also meant that we had to work hard to ensure that founders across the United Kingdom knew that we were open for business,” she says. To accomplish this, Scott and her team divided the U.K. into 11 different regions, each one served by a Tech Nation representative responsible for discovering founders and figuring out how to best serve them.

“Overall, nearly 60% of the companies we helped were outside London,” Grech says. “We are proud of the systems and processes we put in place to build businesses that represent people from as many different backgrounds as possible. We learned a lot about how to accomplish that.”

Startup Ecosystems Are Not Created

Tech Nation's approach to ecosystem building focused on amplifying existing startup communities instead of attempting to create new ones from scratch. “You cannot create ecosystems. You can amplify ecosystems,” former Entrepreneur Success Director Mike Jackson says. “Our job was to help companies that were facing the scaling inflection point, and you only get to that stage once you've got a vibrant startup community. These communities have to be spontaneous. You can't create startup clusters — they emerge.”

Establishing scaleup ecosystems in all regions of the U.K. would have been prohibitively expensive. Therefore, entrepreneur engagement managers cherry-picked the best scaleups from around the country to participate in Tech Nation programs. The primary selection factor was ambition. “We were looking for companies that were super ambitious and wanted to grow both nationally and internationally. They wanted to become the best — they wanted to be category leaders,” Jackson explains.

Series A is Where the Magic Happens

According to Scott, doubling down on the success of the highest potential Series A businesses is essential to producing dividends that benefit the entire ecosystem in the shortest amount of time. “Getting it right at Series A and really supporting those high-potential companies so they make it through the alphabet rounds and become a big local success story — that's where the magic happens,” she says.

Jackson agrees with Scott on the importance of the Series A funding round. "It's not about the label or amount of money raised. It's about validation. When we’re looking at hundreds of companies, we want to get them at a similar stage, so we can talk about growth. On the first day of a program, everyone in the room must feel that they're at a similar stage with the same level of ambition,” he says.

Ecosystems Don't Always Scale with Age

One of the most important Tech Nation takeaways is that ecosystem maturity doesn’t come naturally with age. As Scott explains, “I had assumed the following path of ecosystem development: first, the community gets behind it. Then the central and local governments follow. Companies then naturally scale, wealth and expertise are recycled, and ta-da, you've got a developed ecosystem. As it turns out, that's not the case.”

She also says that there were long-established ecosystems throughout the U.K. that never scaled, which she notes was often because of a lack of cohesive vision in addition to challenging underlying economic conditions that prevented significant investment.

Government Funding Enhances Credibility and Fairness

As a government-backed organization, working hand in hand with policymakers was a critical element of the Tech Nation story. Among the many lessons learned, Grech highlights the significance of working with people who truly understand the scaleup ecosystem. Jackson has recently joined Apexe Global’s Hypergrowth Quebec program, a mentorship and global commercialization program for late-stage startups. As Program Manager, he will use his experience to work with local governments and support startup leaders in building the skills and global business network needed to achieve hypergrowth towards multi-billion-dollar IPOs and exits.

In any scaling program, collaboration is key. “If a program was completely funded by the private sector, it wouldn't necessarily work. You would not be able to manage or develop an ecosystem with credibility and fairness,” says Grech.

He also warns that working with governments can be time-consuming and unpredictable even in periods with stable leadership. In recent years, the U.K. went through five prime ministers in six years, creating even more instability and inconsistency for innovation agencies and the business community.

The Enduring Legacy of Tech Nation

Tech Nation's impact on the U.K. economy cannot be denied, contributing to a staggering £701 million ($885 million) of gross value added since 2014. From Busuu, which connects over 120 million language learners around the world, to what3words, an app with literal life-saving potential, Tech Nation’s success lives on in the companies that the program scaled. A third of all unicorns ever created in the UK’s tech history went through at least one of Tech Nation’s growth programs.

Over a decade of Tech Nation contributions to the U.K. scaleup ecosystem have poised the sector to generate an astonishing $2.6 trillion by 2032. As highlighted in the Tech Nation Report 2023, even greater heights are within reach: a $4 trillion ecosystem can be achieved through increasing investments in Deep Tech and Climatetech, expanding the sector to further embrace underrepresented groups, and prioritizing the generation of value by recycling capital and talent.