Digital Growth Grant

Introduction

Early in 2022, the value of the UK’s tech sector passed $1 trillion. The UK is only the third country in the world to have a tech sector reach this valuation. The UK has created more unicorns than any other country in Europe. The government is committed to making the UK the best place to found and grow a tech business and securing the UK’s status as a global science and technology superpower.

The Department for Digital, Culture, Media and Sport (DCMS) will run a Digital Growth Grant competition over Summer 2022. Bids will be invited to address identified market failures and accelerate the growth of tech start-up and scale-up ecosystems across the regions and nations of the UK. The successful bidder will be awarded up to £12.09 million to be spent over two financial years 2023/24 and 2024/25.

Further detail on the grant objectives, eligibility and application process will be published in Summer 2022 when the competition opens for applications.

The detailed grant specification is currently being developed in consultation with the market. DCMS is inviting organisations to participate in upcoming webinars as an opportunity to ask questions and to express their views and ideas about the scope of future provision of government-funded support for tech start-ups and scale-ups.

Express your interest to contribute your views and to stay up to date on when the Digital Growth Grant goes live.

If you would like to find out more about this grant and how to engage with the Department as a potential bidder, please get in touch with us at dcmsdigitalgrowthgrant@dcms.gov.uk or register for one of our upcoming webinars.

Objectives

The objectives of the Digital Growth Grant will be based around:

1. Delivering support services to the digital sector, particularly in transformative/emerging technologies. These services should address key challenges faced by a wide range of companies from seed stage to series A/B, their first or second round of financing.

2. Developing the growth of regional support networks for tech start ups and scale ups. Activities should deliver concrete improvements against three or more areas identified in DCMS Regional Ecosystems Report: Investment, Skills, Innovation, Infrastructure and Business Growth/GVA. Interventions should be tailored to local needs and tech specialisms, and developed in partnership with local bodies.

3. EnsureEnsuring 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 start-ups and scale-ups to the digital skills initiatives in private and the public sector (DCMS’ local digital skills partnerships) and share information on the types of roles available in tech companies, the skills required to access these roles, and direction to low/no cost skills provision to acquire those skills.

4. Promoting and raising awareness of the strength and competitiveness of the UK tech sector with the aim of boosting investor confidence and inspiring the next generation of tech workers and entrepreneurs.

All eligible UK-based organisations will be able to apply. We will also welcome applications from eligible consortia.

ContactGuidance for potential bidders

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IfThe yousuccessful bidder would likeneed to finddeliver outon moreall of the objectives listed above. As such, it does not comprise individual grants for individual tech companies. The successful bidder will act as a provider of support services to tech startups and scaleups within the UK economy as a whole.

The grant can be used both to amplify existing activity and to create new programmes. For example, if a bidder already delivers existing accelerator, incubator or growth programmes for startups and scaleups, this grant can support those activities as long as they meet the objectives.

The activities to be delivered under this grant should cover the whole of the UK in order to  meet the objective of stimulating UK-wide regional growth of tech ecosystems.

To prevent duplication with other digital skills support schemes and funding available, the intention is that this grant would provide signposting towards existing skills programmes and initiatives rather than designing new, competing skills packages.

We welcome bidders proposing strong argumentation for particular sectors or sub-sectors (such as agritech, quantum, cyber, etc.) that they feel warrant support as part of their proposal. It should be noted however that the specification will not be prescriptive about sectors.

UK-based organisations registered entities that can meet the criteria that will be set out in the grant specification are eligible to apply for this funding.

Public sector organisations are not eligible to receive this grant funding (for the purposes of this grant, we do not consider universities or higher education institutions to be public sector).

This grant funding is designed to further stimulate the development of a commercial market for tech startup and scaleup support services. We expect reliance on this grant would reduce over time as we would expect bidders to demonstrate how commercially sustainable they are or will become as part of their application.

As for any government grant, we will conduct due diligence on shortlisted bidders before agreeing to engagerelease funding. The successful party will be required to cooperate with mandatory checks which would include but not be limited to the Departmentprovision asof data usually contained in financial accounts.

The grant will be awarded to a potentialsingle bidder,organisation registerbut we welcome applications from consortia. Consortia would need to specify who their lead applicant is and how they would divide the delivery of the grant objectives. The lead partner will be the prime recipient of grant funding. They will be responsible for managing the consortium’s delivery and for allocation of grant funding to other consortium members through a collaboration agreement or equivalent.

The process for this grant competition will be a one-stage process and will follow the Cabinet Office’s guidance for general grants. We are working to ensure organisations have as much opportunity as possible to apply for this funding. Applications will be assessed by a panel of assessors who will independently judge each bid against known criteria to determine the grant recipient. These criteria will be set out in the specification.

There is no requirement to have match funding in order to submit a bid but if a bidder did put forward a proposal to match fund, it would be taken into consideration through the bid assessment.

DCMS will have limited control over how the funds will be spent and will remain at arm’s length from the delivery partner and its outputs. The grant agreement will be focused on ensuring the proper application of the funds. Terms and conditions will focus on broader aims/milestones and categories of expenditure.

The grant agreement will require the preparation of a delivery plan, prepared by the delivery partner and agreed with DCMS. The delivery plan includes: a forecasted budget; detail on the proposed programmes; a risk assessment; and benefits coming from the grant. The grant agreement letter will set out the terms and conditions of the grant, including monitoring/evaluation and eligible expenditure. DCMS will meet monthly and quarterly with the delivery partner to monitor their progress.

The full list of eligible and ineligible expenditures will be published as part of the grant specification in June. However, as with most government grants, there will be permissible overhead cost coverage where this directly relates to the delivery of grant activities.

We understand that TUPE liabilities may be material to bidders’ decision making process. Any information about the application of TUPE and associated anonymised data will be made available when the specification goes live in June to help bidders make an assessment.

This grant constitutes a subsidy and as such subsidy control rules apply regardless of the type of organisation that is being grant-funded or supported via grant-funding.

Before awarding the grant, DCMS will need to ensure that the grant is compatible with all subsidy control requirements which are in force. This will include the requirements in the new Subsidy Control Act 2022 if it is in force at the time. If DCMS is not able to satisfy ourselves that the grant is compatible with our upcominglegal webinarsobligations, we would not award the grant.

Standard grant terms and conditions require the grant recipient to ensure that the activities funded by the grant are compatible with, and do not put DCMS, in breach of, the subsidy control rules. In practice, this means, for example, changing any part of the agreed project/funded activities in a way that would make the grant non-compliant with the subsidy control rules. DCMS can tell grant recipients on what basis the grant has been assessed to be compliant with the subsidy control rules. DCMS will provide guidance on what the recipient should not do and what records need to be kept to show compliance with the subsidy control rules. If bidders/grant recipients want independent legal advice on this, they are free to seek this themselves at their own cost.

Tech Nation’s six year funding period has now come to an end. Over the last six years, the tech sector has flourished in the UK and we believe this is the right time to assess the tech ecosystem to ensure our support is tailored to the growth of the UK’s tech sector and to ensure value for taxpayer’s money. We have designed a robust and open competition, inviting a wide range of organisations to compete for the funding in line with the standard process for Government grants, and are consulting the market to ensure the objectives and activities of the grant are appropriate and aligned to the current and future needs of the sector. There is no set requirement to continue with specific programmes that Tech Nation currently provides. We are interested to hear about new and innovative approaches to delivering the objectives set out in the guidance.

We have made public the assessment of the previous grant to Tech Nation, there is an annual review. that we undertook last year that is publicly available.

Contact

Please contact dcmsdigitalgrowthgrant@dcms.gov.uk if you have any questions.