UK technology start-ups will be helped to survive the coronavirus outbreak with a £1.25 billion government support package, the Chancellor of the Exchequer has announced.
Rishi Sunak said the targeted help would ensure firms in dynamic sectors such as technology and life sciences are protected through the crisis so they can continue to develop innovative products.
The package comprises a £500m loan scheme for high-growth firms, called the Future Fund, and £750m of targeted support for small and medium sized businesses focusing on research and development.
“Britain is a global leader when it comes to innovation,” said Sunak. “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.”
The £500m Future Fund has been designed to provide high-growth companies with investment 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 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 £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-sized 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 £2.5 billion British Patient Capital fund, the upcoming £200m Life Sciences Investment Programme, internationally competitive R&D tax reliefs and major commitments to increase public R&D spending to £22 billion by 2024-25.
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