U.K. Gov’t To Invest $250M In Cyber Security Startups To Help Spooks


Image Credits:

Despite on-going belt-tightening of the U.K.’s public finances, there’s going to be more taxpayer cash and support up for grabs for cyber security startups starting from early 2016.

Yesterday Chancellor George Osborne named the tech sector as a priority area, setting out a plan to boost related government spending over the next five years — with the aim of bolstering domestic intelligence capabilities and defending U.K. critical infrastructure and ecommerce activity from hackers.

The government also wants to explore ways to work more closely with ISPs to try to divert malware attacks and block known malicious URLs.

Bolstering the regulation framework around critical national infrastructure is another government priority in this area, he said.

Giving a speech at the GCHQ intelligence agency, Osborne announced a plan to nearly double spending on cyber security investment — with £1.9 billion to be spent by 2020 (although total government cyber security spending, so also adding core capabilities to protect its own infrastructure and networks, brings the total to more than £3.2 billion).

He dubbed it “a bold, comprehensive programme that will give Britain the next generation of cyber security, and make Britain one of the safest places to do business on line”.

The spending increase will specifically go towards adding 1,900 new staff across the U.K.’s three intelligence agencies, and setting up a new National Cyber Centre, which will report to the director of GCHQ — allowing the new Centre to tap into classified expertise.

Osborne said the aim with the Centre is to create a one-stop-shop for cyber security “advice and support”, staffed by a “dedicated ‘cyber force’”, replacing the current “array of bodies” with a single point of contact to make it easier for industry to get government support on cyber security matters and vice versa.

“It will give us a unified platform to handle incidents as they arise, ensuring a faster and more effective response to major attacks. And we will build in the National Cyber Centre a series of teams, expert in the cyber security of their own sectors, from banking to aviation, but able to draw on the deep expertise here, and advise companies, regulators, and government departments,” he added.

As part of the security funding bump — and partly funded by it, along with funding from the Defence budget — he also detailed a new £165 million Defence and Cyber Innovation Fund specifically aimed at widening  government procurement when it comes to security technologies by bringing startups into the mix.

“We will create a £165 million Defence and Cyber Innovation Fund, to support innovative procurement across both defence and cyber security,” he said. “It will mean that we support our cyber sector at the same time as investing in solutions to the hardest cyber problems that government faces.”

A Treasury spokesman confirmed this pot of money will be specifically for investing in startups building cyber security technologies that are of interest to the government and its intelligence agencies.

“It’s to invest in startups that are working in areas that overlap with and are in line with what the government and the intelligence agencies believe are the important areas to strengthen in our innovation,” the spokesman told TechCrunch. “So when they see areas of overlap they will invest.”

The government is not revealing which specific security tech priority areas it’s most interested in at this stage — albeit presumably startups offering robust end-to-end encryption need not apply (given ongoing criticism of companies’ use of this tech by senior government ministers, the Prime Minister and U.K. intelligence chiefs).

It’s also not clear how the £165 million will be assigned and divided between startups that are building technologies that align with government surveillance and cyber security priorities. Nor whether startups have to be founded in the U.K.

The spokesman said more details will be provided about how the fund will operate by early next year.

Government-backed Passion Capital founding Partner Eileen Burbidge, who is also Chair of Tech City UK and an active investor in security startups as well as an advisory board member of the recently launched London-based cyber security incubator CyLon, said the fund is “loosely inspired” by In-Q-Tel — aka the CIA’s VC arm.

Does Burbidge see any contradiction in the U.K. government pushing an anti-encryption message, on the one hand, yet banging the drum for improved cyber security on the other?

“I do not find the announcement of a Fund to support the cyber security industry in Britain at all in any kind of conflict about other statements or rhetoric regarding what law enforcement might need/want for national security,” she told TechCrunch.

“I think increasing Britain’s capability to lead in cybersecurity defense (and offense which Chancellor also mentioned yesterday) is very good… And will even go to help foster and create other solutions and means for reassuring citizens about safety of systems online… Which maybe helps to quell unhelpful or technically inarticulate statements about encryption for example.”

“Bottom line we need to get smarter/better about security in general; that’s how we get away from making blanket statements or implications out of reaction — which lead to confusion and concern,” she added.

Giving one hint of tech areas the government is interested in, Osborne said it intends to ramp up both cyber security defence and offence — the latter via an existing partnership between GCHQ and the Ministry of Defence, called the National Offensive Cyber Programme.

“We are building our own offensive cyber capability — a dedicated ability to counter-attack in cyberspace,” he said. “And we will now commit the resources to develop and improve this capability over the next five years.”

Osborne said the government will also be establishing two cyber security co-working spaces for early stage startups — apparently taking a leaf out of the startup incubator playbook. Albeit it’s not clear how these government “cyber innovation centres” will operate as yet.

Osborne said these will be “places where cyber start-ups can base themselves in their crucial early months, and which can become platforms for giving those start-ups the best possible support”.

On working more closely with ISPs to try to cut off access to malware, Osborne added: “Internet service providers already divert their customers from known bad addresses, to prevent them from being infected with malware. We will explore whether they can work together – with our help – to provide this protection on a national level.

“We cannot create a hermetic seal around the country – indeed it wouldn’t be in our interests to have one – but with the right systems and tools our private internet service providers could kick out a high proportion of the malware in the UK internet, and block the addresses which we know are doing nothing but scamming, tricking and attacking British internet users.

“Let us try to get to the point where all the internet service providers will as a matter of routine divert known bad addresses.”

The government has previously leant on ISPs to do more to help tackle extremism online — securing agreement from four major U.K. ISPs to host a public reporting button for extremist and terrorist material online this time last year.

More recently, ISPs are also at the core of government plans to overhaul surveillance legislation and plug what it terms “capability gaps” in intelligence gathering in the digital era. The draft Investigatory Powers Bill requires that ISPs capture and retain details of U.K. web users’ browsing habits for 12 months so the data can be available to intelligence and law enforcement agencies.

Another focus for the government’s increased spending on cyber security is spending to try to boost tech skills, with Osborne announcing a plan to run a £20 million competition to open a new Institute of Coding to plug what he conceded is still a gap in higher education around “high level digital and computer science skills”.

There will also be a push to create higher and degree level apprenticeships in “key sectors” — starting with finance and energy; a government funded retraining program for “highly skilled workers” wanting to move into the cyber security sector; and a program modeled on an Israeli scheme that aims to foster cyber skills in 14- to 17-year-olds.

More TechCrunch

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

18 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

3 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

3 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies