HM Treasury announces new £1.25bn coronavirus package to protect firms driving innovation in UK, 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. SMEs focusing on research and development will also benefit from £750 million of grants and loans.
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 £5m from the government, with private investors at least matching the government commitment. These loans will convert to equity if 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 £250m 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 £750m 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 £200m of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550m 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 £2.5bn British Patient Capital fund, the upcoming £200m Life Sciences Investment Programme, internationally competitive R&D tax reliefs and our major commitments to increase public R&D spending to £22bn by 2024-25.
Technology sector reaction
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.”
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.”
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.”
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.”