The Chancellor, Rishi Sunak has announced today that UK businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion government support package.
Rishi Sunak said the targeted and tailored help would ensure firms in some of the most dynamic sectors of the UK economy, ranging from tech to life sciences are protected through the crisis so they can continue to develop innovative new products and help power UK growth.
The comprehensive package includes a new £500 million loan scheme for high-growth firms, called the Future Fund, and £750 million of targeted support for small and medium sized businesses focusing on research and development.
Chancellor of the Exchequer Rishi Sunak, said: 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.
This new, world-leading fund will mean they 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, said: 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.
Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden, said: 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.
The £500 million Future Fund has been designed to ensure high-growth companies across the UK receive the investment they need to continue during the crisis.
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.
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.
This package builds on the government’s existing support for innovative, high-growth firms including the £2.5 billion British Patient Capital fund, the upcoming £200 million Life Sciences Investment Programme, internationally competitive R&D tax reliefs and our major commitments to increase public R&D spending to £22 billion by 2024-25.
- the £500 million Future Fund is comprised of £250 million from government combined with equal match funding from private investors
- further detail on eligibility criteria and fund operation will be published in due course
Will Shu, CEO and founder of Deliveroo, said: It’s great news that the Chancellor is supporting British start-ups that are innovating and will be so vital to the UK economy in the months and years ahead with such a practical and thoughtful scheme.
Daniel Hegarty, founder and CEO of Habito said: As a start-up and the UK’s leading digital mortgage company already helping the millions of homeowners and would-be homeowners affected by the coronavirus crisis across the nation, we welcome the Chancellor’s new support package with open arms. We’re already seeing start-ups adapting, pivoting and innovating at pace to help both customers and industry stakeholders navigate this time of uncertainty and I have no doubt businesses like ours will be key to helping stabilise the economy in the coming months.
Sir Mark Walport, Chief Executive of UK Research and Innovation, said: 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.
Dom Hallas, Executive Director of The Coalition for a Digital Economy (Coadec) said: Britain is the start-up capital of Europe and this package is a signal of intent that the Government will make sure it remains so in the future. This support will help early-stage innovators survive the crisis and thrive after it.
Brent Hoberman, Founders Forum, Founders Factory, firstminute capital Co-Founder and Executive Chairman said: Entrepreneurs across the country will be delighted with the announcement that the Chancellor has launched this important source of support at this critical time.
The capital being made available under the Chancellor’s programme should also serve as a powerful catalyst to the unlocking of private support, which together, will provide essential funding to worthy early stage companies to help them get through the current crisis.
Some of these companies are destined to become the technology success stories of our future. In time we should be able look back and see that government support at this critical juncture helped some of the early stage companies of today turn into the job creators, tax-payers and technology leaders of our future.
With the shot-in-the-arm now being provided by the Chancellor, the U.K. should remain the first choice for founders seeking to grow their technology companies in Europe.
Mike Cherry, Federation of Small Businesses National Chair, said: Today’s announcement will be a vital cashflow boost for many smaller businesses at the forefront of technological development and innovation. This is an investment in transforming our futures, as these SMEs focus on research and development in key areas such as life sciences, artificial intelligence, big data, and clean energy. We will work with the Chancellor, British Business Bank and Innovate UK to raise awareness of the programmes and get this help out to where it’s needed.
Julian David, techUK CEO said: techUK welcomes the support being made available today by Government. 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.
The UK’s tech sector has been working with the Government and NHS to contribute to the COVID crisis response and this scheme will help ensure that more of these companies are able to survive to help UK communities and the economy recover post-crisis.
Charlotte Crosswell, Innovate Finance CEO said: We welcome the announcement from the Chancellor regarding support for high-growth FinTechs and start-ups. Financial innovation will play a vital role as we emerge from the crisis, especially in areas of financial inclusion, SME financing and digital transformation of the financial services sector.
More broadly, this is about protecting the innovation in finance that will be vital for the UK’s recovery efforts. These new measures will help FinTech businesses to raise the funds needed to survive the crisis. It will support a sector full of early stage companies, which are more prone to struggle in these volatile times.
The UK is already known globally as a leader in FinTech and we want to ensure companies have support and funding in place to continue their development at this crucial time.
Tej Parikh, IoD Chief Economist said: It’s welcome to see the Government continuing to adapt its support measures in response to the situation on the ground. Our start-up community has been a driving force for the economy, and it’s vital they get the support they need. At such difficult times, the importance of innovation comes to the fore. When we emerge from this challenging time, we will need the UK’s entrepreneurial spirit to be stronger than ever.
Michael Moore, the Director General of the British Private Equity and Venture Capital Association (BVCA), said: The government’s new programme to support venture-backed businesses is very welcome.
The UK is a global leader in key aspects of the digital, high technology and life science economies: this scheme recognises the sector’s importance and will help businesses to navigate the COVID-19 crisis as we seek to maintain and develop that leadership position.
We will continue to work with the government on the details and extent of the programme to ensure that the finance achieves the objective of sustaining this strategically-important sector.
Gerard Grech, Chief Executive, Tech Nation said: This is a bold and welcome intervention for the tech sector. Tech start-ups and scale-ups are crucial to the UK’s future growth, jobs and innovation.
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% of all European tech investment was in the UK. We must do everything to keep building on this success story.
Erin Platts, Silicon Valley Bank, Head of EMEA and President of the UK Branch said: We welcome today’s announcement from the Chancellor as a very positive step in supporting the UK’s Innovation Economy. Getting funds into the hands of entrepreneurs to protect the UK’s technology and healthcare industry is critical to maintaining our place as one of the most attractive and successful tech hubs globally. UK start-ups and scale-ups are creating technologies and jobs that are critical to the development of life changing breakthroughs and enhancements in the areas of healthcare, finance, communication, education, work and beyond. We believe these actions are a welcome step in the right direction and we look forward to supporting UK innovation companies and their investors through these initiatives and other government programmes.
Hussein Kanji, Partner Hoxton Ventures LLP said: We’re delighted to see that the government highly values the UK startup community and is willing to protect it, especially during this turbulent period. The UK has developed into a leading innovation economy over the past decade and we’re confident that with everyone’s support, we will continue to build upon this growth and leadership.
Bill Winters, Group Chief Executive at Standard Chartered Bank, said: We are delighted to see the Chancellors announcement of the formation of the Future Fund. Standard Chartered has supported HM Treasury over the last few weeks with specific advice to address the innovation segment of the UK Economy during the Covid-19 pandemic. The Future Fund will provide vital funding to support UK innovative companies during this period of economic disruption. At Standard Chartered we stand ready to mobilise to ensure these funds are rapidly deployed to innovative companies here in the UK in need of capital.
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