Over the weekend I found out about a great initiative from a team dedicated to the support and encouragement of entrepreneurs. Crowdcube has launched the “Save Our Start-ups” campaign, with an open letter to Boris Johnson outlining what needs to be done to protect Britain’s entrepreneurial future from the economic crisis caused by Covid-19.
This morning I had a call with Luke Lang, Co-founder & CMO at Crowdcube, we both have a real passion to support entrepreneurs, and I, with The Fintech Times have offered to support the programme in any way we can. This is and is going to continue to be a very difficult time for both early stage start-ups, scale-ups and high growth companies. The UK government has been surprisingly quick to react with economic stimulus, however, there are many start-ups that will be overlooked with the various schemes.
A Virgin start-up report, “The Start-up Low Down” back in 2019 told us that start-ups contribute £196 billion to the UK economy every year, this is something that needs to be saved. The UK Government must act now to protect Britain’s entrepreneurial future so we do not lose a generation of startups and high growth businesses to COVID-19.
Hence, I and everyone at The Fintech Times are pledging our support to the S.O.S Save Our Start-ups campaign. Read the open letter via the website but more importantly sign the petition #sign-petition
This is an opportunity for founders, employees, shareholders, customers and the wider ecosystem supporting Britain’s startup and high growth businesses to tell the UK Government what needs to be done to protect their future.
An open letter to Boris Johnson, Prime Minister of the UK:
Britain has a proud history of innovation, enterprise and entrepreneurship. However, today’s entrepreneurs are being forgotten during the Covid-19 crisis, which threatens their existence. We all want a swift end to this health crisis but we also desperately need to protect the future of our economy during these challenging times.
Today, there are almost 30,000 startup and high-growth businesses in the UK who employ nearly 330,000 people*. These businesses are making a huge contribution to the economy but are often yet to make a profit because they are investing in their people, technology and bringing innovative products and services to market. 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.
The French and German Governments have already worked to craft support that can help their startup ecosystems through the crisis. This three point plan outlines what needs to be done to protect Britain’s startup and high growth businesses:
- The Government needs to provide an equity based liquidity package suitable to save startups at risk. While the CBILS covers a proportion of UK businesses, the majority of startups and high-growth companies will be excluded and as a result, unsupported. Without support, thousands of startups will fold in the coming months. The Government should provide a fresh capital injection for startup and high growth businesses through an equity-based solution.
- The Government must fast track payments to startups from public funding schemes – in particular R&D tax credits and Innovate UK funding grants. 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. It is within the Government’s power to provide these companies with immediate liquidity by expediting the release of these funds.
- The Government must change EIS, SEIS and VCTs to stimulate private equity investment into startup and high growth businesses. Startups are in freefall as they have been left without any debt or equity support. They will need to be able to access more investment from existing investors through Government schemes. If companies and investors are going to recover from this time of great uncertainty, they need a much stronger incentive than currently exists.