This morning the Chancellor announced a billion-pound rescue package for startups struggling to cope amid the coronavirus pandemic. This news will be welcomed by innovative, high-growth businesses across the UK.
The UK government said that £750m of support for R&D intensive small and medium-size companies will be available through Innovate UK’s grants and loan scheme. The remaining quarter of the money will go towards a public-private fund called the Future Fund.
The announcement of the scheme follows similar efforts in France and Germany to bolster start-ups and calls from industry pressure groups.
Grants and loans from Innovate UK
Innovate UK’s funding for the most R&D intensive small and medium-sized businesses will be expanded by £750m.
This will be made up of grants and loans, and while the bulk of it is reserved for businesses who are already receiving Innovate UK funding, over £200 million will be offered to new applicants. The first payments will be made by mid-May.
The private sector will be expected to supply the other half of a £500m fund. The investment of between £125,000 and £5m, will only come alongside private sector investment.
Investments will be made on a 50:50 matched basis with private sector investment. So companies will need to raise the private sector money first before they are eligible for government funding.
To be eligible, a business must be an unlisted UK-registered company that has raised at least £250,000 in equity investment in the past five years.
The government-backed investment will come in the form of convertible loans, which means that if the loans are not repaid they will convert into equity in the company.
Britain is a global leader when it comes to innovation. Our startups 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.Rishi Sunak, Chancellor