Chancellor Rishi Sunak said the 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, added: “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.”
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 £5 million 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 £250 million 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 £750 million 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 £200 million of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550 million 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 £200 million Life Sciences Investment Programme.
The £500 million Future Fund is comprised of £250 million from government combined with equal match funding from private investors and further details on eligibility criteria and fund operation will be published soon.
The announcement has received widespread support from the business community. 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.”
Sir Mark Walport, Chief Executive of UK Research and Innovation, said: “As an important part of this support package for innovative firms, Innovate UK will provide immediate cashflow support to small companies who are developing the products and services of the future, to continue this work throughout the crisis and be an engine for growth once the outbreak is over.
Mike Cherry, Federation of Small Businesses National Chair, said: “Today’s announcement will be a vital cashflow boost for many smaller businesses at the forefront of technological development and innovation. This is an investment in transforming our futures, as these SMEs focus on research and development in key areas such as life sciences, artificial intelligence, big data, and clean energy. We will work with the Chancellor, British Business Bank and Innovate UK to raise awareness of the programmes and get this help out to where it’s needed.”
Julian David, techUK CEO said: “techUK welcomes the support being made available today by Government. The businesses that will be supported by these schemes represent the innovative companies of tomorrow. techUK will continue to work with Government to clarify how the schemes will work in practice to ensure the broadest range of companies can benefit from this lifeline.
The UK’s tech sector has been working with the Government and NHS to contribute to the COVID crisis response and this scheme will help ensure that more of these companies are able to survive to help UK communities and the economy recover post-crisis.”
Michael Moore, the Director General of the British Private Equity and Venture Capital Association (BVCA), said: “The government’s new programme to support venture-backed businesses is very welcome.
“The UK is a global leader in key aspects of the digital, high technology and life science economies: this scheme recognises the sector’s importance and will help businesses to navigate the COVID-19 crisis as we seek to maintain and develop that leadership position.
“We will continue to work with the government on the details and extent of the programme to ensure that the finance achieves the objective of sustaining this strategically-important sector.’
Gerard Grech, Chief Executive, Tech Nation said: “At this moment of global crisis, the UK must ensure that the tech sector builds on the huge successes it has achieved over the past 10 years, and that it continues to deliver for the economy. In 2019, a staggering 33% of all European tech investment was in the UK. We must do everything to keep building on this success story.”