The UK government is reportedly looking at a range of options to support the startup industry, possibly involving a co-investment model involving state-owned funds (via the British Business Bank) and private VC funds. Investors have been warning that typically loss-making, early-stage startups are at risk of collapse amid the coronavirus crisis. But the moves come […]

COVID-hit UK startups cry out for help, as UK gov trails Europe in its response – TechCrunch

Ministers understood to be keen to support the strong UK startup and innovation sector and options allegedly being considered include convertible loans, which could either be later repaid or turned into equity stakes owned by the state. Also being considered is additional grant funding via InnovateUK, a government body providing support to innovative businesses, and an expansion of R&D tax credits. The proposals under consideration include ones put forward by a number of significant players in the UK tech industry, who jointly launched a campaign over the weekend to pressure the government into creating a support package to aid startups struggling to deal with the COVID-19 crisis. It claims more than 30,000 startups employing some 330,000 people do not qualify for existing support measures and are therefore in jeopardy if new policies are not developed to help them. Jeff Lynn, executive chairman and co-founder of Seedrs, who was a signatory to the letter, commented: “The growth of the startup ecosystem has been one of the great successes of the UK economy over the past decade. They are highly unlikely to qualify for the Coronavirus Business Interruption Loan Scheme (CBILS), which was introduced to provide financial support for SMEs during this pandemic.” While CBILS covers a proportion of UK businesses, the majority of startups and high-growth companies will be excluded and as a result, unsupported. Private sector liquidity has taken a major hit during the crisis with angels and micro-funds unable to provide startups and high growth businesses with bridging money. Luke Lang, cofounder of Crowdcube, which initiated the campaign with Coadec, commented: “Other European countries have raced to rescue its startup and tech communities, with French and German Governments committing €6bn in funding. The UK is sluggish by comparison, and further delays are unforgivable and threaten thousands of promising startup and high-growth businesses with huge potential.”

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