The Chancellor of the Exchequer Rishi Sunak has announced the May launch of a £1.25 billion government support package to help UK businesses driving innovation and development through the coronavirus outbreak.
The package includes a £500 million investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector. In addition SMEs focusing on research and development will benefit from £750 million of grants and loans
In the announcement Sunak said: “This new, world-leading fund will mean they (start-ups and businesses driving research and development) can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.
Alok Sharma, Business Secretary, added: “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.”
In an email to SC Media UK, Saj Huq, programme director, LORCA, commented: “The Future Fund will provide many UK startups with the vital support they need to outlive what could be the biggest economic downturn in a generation. However, the UK has sustained itself as a world leader in tech by creating an ecosystem in which only the most innovative survive. Failure is part and parcel of the innovation process and so we must ensure that funding is meritocratic and does not lower the bar for success among early-stage companies.
“The UK has established a strong cyber-security innovation ecosystem in recent years, leading to the emergence of several industry leaders. Now more than ever, it’s critical to nurture them to ensure the resilience of the burgeoning digital sector that our economy heavily leans on. Ease of access to government support will be critical, given the ever-shortening cash runway for cyber-security startups and scaleups. As we have seen with CBILS, this has not always been the case.”
Delivered in partnership with the British Business Bank and launching in May, the fund will provide UK-based companies with between £125,000 and £5 million from the government, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. 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.
The government is committing an initial £250 million in funding towards the scheme, which will initially be open until the end of September. The scale of the fund will be kept under review.
The £750 million of targeted support for the most R&D intensive small and medium size firms will be available through Innovate UK’s grants and loan scheme.
Gerard Grech, chief executive, Tech Nation has said: “At this moment of global crisis, the UK must ensure that the tech sector builds on the huge successes it has achieved over the past 10 years, and that it continues to deliver for the economy. In 2019, a staggering 33 percent of all European tech investment was in the UK. We must do everything to keep building on this success story.”
Julian David, techUK CEO notes: “The businesses that will be supported by these schemes represent the innovative companies of tomorrow. techUK will continue to work with Government to clarify how the schemes will work in practice to ensure the broadest range of companies can benefit from this lifeline.
Innovate UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. The first payments will be made by mid-May.
Sir Mark Walport, chief executive of UK Research and Innovation, concludes: As an important part of this support package for innovative firms, Innovate UK will provide immediate cashflow support to small companies who are developing the products and services of the future, to continue this work throughout the crisis and be an engine for growth once the outbreak is over.”