DCMS launches £12m Digital Growth Grant; wants less London-centricity

DCMS has launched a competition for a £12 million two-year renewal of the Digital Growth Grant, currently awarded to Tech Nation, and focused on moving beyond London startups.

The application document for the Digital Growth Grant contest make it clear DCMS is looking to broaden the reach of the programme. It acknowledges Tech Nation has been successful at expanding the UK’s tech startup sector – but says it wants to see the benefits reach a wider swathe of the UK.

“Current growth programme provision is often concentrated in low-risk, established markets and regions. For example, evidence shows that 58% of UK accelerators are based in London, 6% are based in Scotland and 2% are based in Wales,” said the Digital Growth Grant competition document.

“Taking into account the number of accelerators per number of businesses that are created, there is a particularly low proportion of accelerators in the East of England (3%), South East (6.21%) and South West (4.35%) of England.”

It also emphasised the benefits of tech clusters for regional development in general, along with knowledge sharing and innovation specifically. It cited a Barclays Eagle Labs report which found a “strong positive association” between the number of high-growth companies in a given region and the Gross Value Added generated in that region.

“Local authority areas that are home to 100 or more high-growth companies have an average Gross Value Added (GVA) per person of £138,000, compared to £22,000 for those with less than 100,” said the document.

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DCMS is also looking to promote greater equality and diversity in the UK tech startup scene through the Digital Growth Grant, noting women make up less than 31% of the digital sector workforce, and just 12.6% of board members and 16.6% of senior executives at large UK tech firms are women.

The Digital Growth Grant also comes with specific objectives:

• Deliver support services to the digital sector, particularly in transformative/emerging technologies. These services should address key challenges faced by a wide range of tech companies from the seed funding stage to series A/B, their first or second round of financing.
• Grow regional support networks for tech startups and scaleups. Activities should deliver concrete improvements in three of the areas that were identified in DCMS’ Regional Ecosystems report as crucial to the success of the digital economy. These are: Investment, Innovation, and Business Growth. Support should be tailored to local needs and tech specialisms, and should be developed in partnership with local bodies and existing tech groups.
• Ensure founders and firms can access digital entrepreneurship and investment readiness training with tailored advice to help develop their skills to start and grow a tech business.
• Clearly signpost startups and scaleups to existing initiatives in the private and the public sector across the UK that can help them access finance, talent and markets.

“Applicants must detail in their applications how they expect to deliver these objectives. Support should be aligned with, and not duplicate, existing initiatives. We welcome bidders’ own prioritisation of these objectives and bidders are asked to explain their rationale in the application form,” said the competition document.

As for outcomes, DCMS expects the Digital Growth Grant to deliver an increase in UK digital sector growth, including jobs, investment and IPOs; an increase in net employment in the digital sector; and a better-connected tech ecosystem across UK’s nations and regions, with more investment going outside London.

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DCMS noted Tech Nation’s activities have led to 14-25% increase in employment growth for participating businesses, according to an independent impact evaluation done in 2020 by Frontier Economics.

For its part, Tech Nation confirmed to The Stack it intends to apply for the Digital Growth Grant.

“Tech Nation has an eight year successful track record in supporting and promoting the UK tech sector – an important pillar in the UK economy. Tech Nation programmes have engaged over 3,000 businesses, including over 1100 companies which have specifically graduated via its growth programmes including a third of all UK-based tech unicorns. It has also contributed more than £600M of Gross Value Add (GVA) to the UK economy, with a return on investment of 15x,” said a Tech Nation spokesperson in an email to The Stack.

“We work in close partnership with DCMS and have been working with them to evolve our current funding model. Tech Nation continues to play a fundamental role in the UK tech ecosystem and will do so going forward.”

Applications for the Digital Growth Grant are open now, and close at noon on 15 August. The funding will be for two years, from April 2023 to April 2025, with the prospect of a two-year extension (with less funding).

“The success of our startups and scaleups has driven the UK ahead of Europe and China to be second in the world for tech investment this year. We want every corner of the country to feel the benefits of tech success and we’re looking for an industry partner to help make this possible through the Digital Growth Grant,” said digital minister Chris Philip in a press release.