High growth firms secure vital government support
Fund will support key research
The government has announced a £1.25 billion package of support for startups and tech businesses struggling as a result of the COVID-19 pandemic.
The Treasury said it wanted to help innovative businesses through the crisis.
It is pledging £750 million of targeted support for what it describes as “the most R&D intensive small and medium size firms.”
Chancellor Rishi Sunak said the initiative would also include a £500m Future Fund for high-growth companies hit by the crisis.
It will provide UK-based companies with between £125,000 and £5 million from the Government via the British Business Bank, with private investors at least matching the Whitehall commitment.
The loans will convert to equity if not repaid.
Britain is a global leader when it comes to innovation– Rishi Sunak, Chancellor
To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third-party investors in the last five years.
UK business secretary Alok Sharma said in a statement: “The UK is a world leader in innovation and at this hugely challenging time, we know that young, fast-growing firms require tailored support to see them through.
“This wide-ranging package delivers important help that will protect some of the most dynamic sectors of our economy.”
Mr Sunak added; “Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis.”
Pressure had been growing in recent weeks for the government to give support to the UK’s tech sector.
Billions of pounds of coronavirus support for businesses of all sizes have been announced by the government. However, all the programmes required companies to be profitable as of December 2019 to qualify for help.
That left many tech startups ineligible. Most are either too early stage to have turned a profit, or else are deliberately loss-making as they plough resources into fast growth rather than focus on profitability.
Digital, Culture, Media and Sport Minister Oliver Dowden said on Sunday night: “We are the tech and creative capital of Europe, and it’s crucial to maintain our place.
“This funding will protect high growth businesses and enable the unicorns of tomorrow to thrive so that tech is in pole position to drive our post COVID recovery.”
Stephen Jones, chief executive of banking industry group UK Finance, told MPs last week that startups were “critical to our future”.
“Many of them are at the cutting edge of biotechnology, financial technology,” Jones told the Treasury Select Committee. “They’re a really important part of why the UK is such a vibrant place to be from a technology perspective.”