The UK Government has announced a £1.25 billion rescue package to help Britain’s technology sector during the COVID-19 pandemic.
Chancellor Rishi Sunak revealed the investment scheme, known as the ‘Future Fund’, will see the government offer loans to start-ups across the country. The government said it will commit an initial £250 million in funding toward the scheme
As part of the package, private investors will also match the government’s commitment – taking the fund total to £500 million.
The investment fund could help early-stage companies across the UK weather the storm during the pandemic, which is already affecting the technology sector in a range of areas from cashflow to talent retention.
Companies will be able to access between £125,000 and £5 million through the fund. For a business to be eligible, it must be an unlisted UK-registered firm that has raised at least £250,000 from third-party investors in the last five years.
If the loans are not repaid, the government says they will be converted to equity; meaning the UK taxpayer could end up with stakes in hundreds of early-stage companies across the country.
Sunak confirmed the fund will be launched officially in May and delivered alongside the British Business Bank. Provisionally, ministers expect the fund to be open until the end of September.
Commenting on the Future Fund announcement, he said: “Britain is a global leader when it comes to innovation.
“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.”
Sunak added: “Our start-ups and businesses driving research and development are one of our great economics strengths, and will help power our growth out of the coronavirus crisis.”
An additional £750 million in funding will be made available for small-to-medium enterprises (SMEs) that are focused on research and development. The government will work closely with Innovate UK to make this funding available.
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This move follows similar announcements made by the French and German government’s to support their respective tech sectors. In March, France announced a €4 billion relief package for startups across the country, while this month saw Germany unveil €2 billion in support.
Gerard Grech, Chief Executive at Tech Nation, said: “This is a bold and welcome intervention for the tech sector. Tech start-ups and scale-ups are crucial to the UK’s future growth, jobs and innovation.
“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.”