UK start-up hit by COVID says government response lags behind other European countries

The British government is working on a range of options to support start-ups, possibly involving a model of joint investment by state-owned funds (through the British Commercial Bank) and private venture capital funds,media reported. Investors have been warning that typical loss-making, early-stage start-ups are at risk of collapse in the new corona virus crisis. But the moves come far behind the generous package launched by continental European governments to support their start-up sectors.

UK start-up hit by COVID says government response lags behind other European countries

Ministers are understood to be keen to support the UK’s powerful start-up and innovation sector, and the options being considered include convertible loans that can be repaid or converted into state-owned equity at a later date. This will require co-investments that match venture capital firms to ensure that only existing venture capital-backed start-ups are eligible.

The Financial Times reports that ministers want to do so on a case-by-case basis, only if companies first seek new capital from private investors. Additional grants are also being considered through Innovate UK, a government agency that supports innovative businesses, and an expanded scope of research and development tax credits.

However, any government intervention is expected to be much smaller than the government’s previously announced support for small and medium-sized businesses and their workers, as investors are usually large rife and technology start-ups typically have far fewer employees than traditional industries. By contrast, the French and German governments have pledged 4 billion euros and 2 billion euros, respectively, to provide aid to their respective tech start-ups.

Proposals under consideration include those of key players in the UK technology industry, who launched a campaign over the weekend to put pressure on the government to come up with a package of support to help start-ups cope with the COVID-19 crisis. The move comes after the British government announced major moves in other European countries, such as France and Germany.

Save Our Start-ups (SOS) has published an open letter to British Prime Minister Boris Johnson warning that the country could “lose a generation of start-ups and high-growth businesses” as a result of COVID-19.

UK start-up hit by COVID says government response lags behind other European countries

The group claims that more than 30,000 start-ups, with about 330,000 employees, are not eligible for existing support measures, so they are at risk if new policies are not in place to help them.

The campaign was launched by crowdfunding platform Crowdcube and industry body Coadec and was supported by tech world stars including Brent Hoberman, co-founder of MinuteLast.com, Zoopla, LoveFilm and Cazoo co-founder Alex Chesterman, net-a-Porter co-founder Arnaud Massenet.

In addition, there are The Entrepreneurs Network, Draper Esprit, Virgin Startups, Vala Capital, Innovate Finance, UK Business Angels Association (UKBAA), EISA, Tech London Advocates, Capital Agencies such as Enterprise and Seedrs have joined in.

Jeff Lynn, executive chairman and co-founder of Seedrs, who is also one of the signatories of the letter, commented: “The growth of the ecological environment of start-ups is a good example. “The development of the startup ecosystem is one of the great achievements of the UK economy over the past decade. All of this work is now threatened by COVID-19, which is why the government, like the French and German governments, must help at this precarious time. The campaign to save our start-ups has three wise and critical requirements that will enable our start-ups to continue to be european and world leaders for the next decade. I am delighted that Seedrs and Coadec (I am the co-founder and chairman of both companies) have become founding partners in the campaign, and I want everyone in the ecosystem to join the sport. “

“These companies make a huge contribution to the economy, but often are not yet profitable because they are investing in people, technology and bringing innovative products and services to market,” the open letter states. These companies are highly unlikely to qualify for the Coronary Virus Business Interruption Loan Scheme (CBILS), which was launched to provide financial support to small and medium-sized businesses during the pandemic. “

The letter notes that the French and German governments are already working to support start-ups.

Save Our Start-Up sly offers three suggestions to the British government:

– Provide an equity-based liquidity programme suitable for saving start-ups to rescue at-risk start-ups. Although CBILS covers a part of the UK, most start-ups and high-growth businesses will be excluded and therefore not supported.

– Rapid payments from public funding schemes to start-ups – in particular the Research and Development Tax Credit and the UK Innovation Grant. Private-sector liquidity has been hit hard by the crisis, and angels and micro-funds have been unable to provide bridge money for start-ups and high-growth companies.

– Changes to EIS, SEIS and VCTs to stimulate business development.

However, some investors are cool about the idea, pointing out that the government may end up owning stakes in companies that would otherwise have been unable to raise private capital, and that weak companies would naturally fall in times of public crisis. Localglobe investor Robin Klein commented on Twitter. “The UK government has done an incredible job of supporting the start-up ecosystem”, but he called the SOS campaign a “knee-jerk response” despite his “100 per cent support for fast BBB and other government support” and “this will be done through established tools.” “

UK start-up hit by COVID says government response lags behind other European countries

Luke Lang, co-founder of Crowdcube, commented: “Crowdcube and Coadec launched the campaign. “Other European countries are also scrambling to save their start-ups and technology communities, with the French and German governments pledging 6 billion euros. The UK, by contrast, is in the doldrums, with further delays unforgivable and threatening thousands of potential start-ups and high-growth businesses. “

The list of executives of the start-up signed in the open letter is as follows:

Darren Westlake – Co-founder and CEO, Crowdcube

Luke Lang – Co-founder, Crowdcube

Brent Hoberman – Executive Chairman, Founders Forum

Alex Chesterman – Founder and CEO, Cazoo; A-founder Co-founder LoveFilm and Zoopla

Arnaud Massenet – Co-founder, Net-a-Porter

Mike Fuller – Co-founder, ARM

Anthony Fletcher – CEO, Graze

Tania Boler – Founder, Elvie

Giles Andrews – Co-founder, Chairman, Zopa, MarketFinance, Bethnal Green Ventures

Adam Dodds – CEO, Freetrade

Jorge Armanet – CEO Founder, HealthUnlocked

Jamie Ward – CEO, Hussle

Samuel O’Connor – CEO, Coconut

Peter Kelly – CEO, Imployable

Lee Strafford – CEO, ADV

Kirsty Ranger – CEO, IdeaSquares

Gem Misa – CEO, Fullgreen

Doug Monro – Co-founder and CEO, Adzuna

Jeff Lynn – Co-founder and Executive Chairman, Seedrs

Stephanie Melodia – Director, Bloom

Tugce Bulut – Founder, Streetbees

Saurav Chopra – Co-founder and CEO, Perkbox

Daniel Korski – Founder and CEO, PUBLIC

David Dunn – Chair, UK Tech Cluster Group

Philip Salter – Founder, The Entrepreneurs Network

Andrew Tibbitts, COO, TechHub Charlotte Crosswell – CEO, Innovate Finance

Robert Walsh – Managing Partner, Q Ventures

Jenny Tooth OBE – CEO, UKBAA

Jonathan Sibilia – Partner, Draper Esprit

Dom Hallas – Executive Director, The Coalition for a Digital Economy (Coadec)

John Spindler – Co-founder and CEO, Capital Enterprise

Mark Brownridge – Director General, EIS Association

Natasha Guerra – Co-founder, Runway East

Andy Fishburn – Managing Director, Virgin Startup

Russ Shaw – Founder, Tech London Advocates

Alex Davies – Founder and Chief Executive, Health Club

Bruce Davies – Director, UK Crowdfunding Association

Andrew Roughan – Managing Director, Plexal

Jasper Smith – Founder, Vala Capital

Gaby Hersham – Founder, Huckletree

Carlos Silva – Co-founder, Seedrs

Yacob SiADATAn- CEO, Ventoura Ltd

Nazim Valimahomed – CEO, Kroo

Katie Vanneck Smith – Co-founder, Tortoise Media

Adrian James – CEO, Monily

Paul Naha-Biswas – CEO, Sixley

Oliver Oram – CEO, Chainvine

Rohit Shetty – Co-Founder and CEO, ArtBrowser

Richard Cooper – Chief Executive Officer, Novosound Ltd

Sam Lehane – CEO, M.Y.O

David Murray-Hundley-Chairman, E Fundamentals

Russell Quirk – Co-Founder, PropergandaPR

Silas Adekunle – CEO, Reach Industries

Matthew Bradley – CEO, Mjp technologies ltd

Charlotte Roach – CEO, Rabble

Ankush Bhatia – CFO, Hussle

Matt Latham – Co-founder, Tickr ltd

Crab Joseph tree – CEO, Additive Manufacturing Technologies (AMT)

Robert Wakeling – CEO, Wadaro Solutions Limited

Joe Sillett – CEO, The Funky Appliance Company

Mike Bristow – CEO, CrowdProperty

Mulenga Agley – CEO, Growthcurve LTD

Kim Nilsson – CEO and Founder, Pivigo

Martin Kievit – Co-founder, Metasite OpenCloud limited

Sam Ducker – Co-founder, Calling Anyone

Neha Khurana – CEO, The Legists

Matt Brooke – CEO, Meet.mba Limited

Manoj Ganapathy – CEO, SalesTrip

Adam McVicar – Co-founder, The Resilience Factor

Bikesh Kumar – CEO, Annexon

Ricky Shankar – Chairman, Clear Factor Limited

Sarah Merrick – CEO, Ripple Energy

Dan Wakeley – CEO, Pilar

Demos Demetriou-Co-founder, blazon

Eoin Cooney – CEO, ARROE Limited

Matt Milligan – Co-founder, Uhubs

Suchit Punnose – CEO, Red Ribbon Asset Management Plc

Laurence Guy – CEO, We Are Pentagon Group

Fred Soneya – Co-Founder and Partner, Haatch

Dana Denis-Smith – CEO, Obelisk support

Neil Harmsworth – Chief Operating Officer, Hussle

Nigel Winsi – Co-founder, People Matter Technology

Cathy Norbury – Co-Founder, InterAxS Global

Shadi Razak – Co-founder and CTO, CyNation

Hassan Bashir – Co-founder, HealthSteer

Dr Yusuf Vali – Co-founder, Healthsteer

Farid Haque – Co-founder, AssetVault

Brad Goodall – CEO, Banked

Dan McGuire – CEO, cube19

Gaute Juliussen – CEO, Toraphene

Mark Musson – CEO, Humn.ai Ltd

James Gupta – CEO, Synap

Mat Megens – CEO, Hyperjar

Jason Bullock – CEO, Numerous Technology

Tim Gentles – CEO, Hatriq

Marcus Greenwood – CEO, UBIO

Gary McDonald – CEO, Limitless Insight

Ryan Gralia – CFO, Fidel Limited

Darrell Coker – Co-founder and Head of Product, Flair

Inga Mullins – Co-forfluency

Ian Smith – CEO, Bei Guided

Kevin Beales – CEO, Refract

Damian Goryszewski – CEO, Colossus Capital Ltd

Mark Milton – CEO, Amberlight Partners

Randel Darby – CEO, Airportr