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UK Startups Could Be Set to Receive £7.5 Billion in Funding

Ross Kelly

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UK Startups Digital Map

A potential deal between the British Business Bank and BGF could see a staggering £7.5 billion in funding for UK startups and small companies across the UK; helping to plug funding gaps after Brexit is finalised. 

Small companies across the UK could be set for a massive boost after it emerged that the British Business Bank is considering a partnership with BGF.

The partnership would see BGF, formerly the Business Growth Fund, invest in UK startups and firms across a broad range of sectors with a staggering £7.5 billion of funding available.

According to The Times, the two have held talks about combining in a fund called British Patient Capital, which would act as a subsidiary of the business bank and combine both public and private funds to make investments of £100 million in small businesses.

Backing Innovation

A potential partnership with BGF could help surge funding to startups across the UK. Currently, BGF is backed by a number of banks, including HSBC and Barclays, and has access to around £2.5 billion in funding.

Over 200 companies have already benefitted from around £1.4 billion in funding, including luggage maker, Trunki, and restaurant chain, Giggling Squid.

The British Business Bank said there were no ongoing discussions with BGF, adding that “we anticipate investing alongside a broad range of private sector investor, including pension funds, sovereign wealth funds and institutional investors.”

Countering the Brexit Downturn

Such a significant fund could be used to alleviate the burden of Brexit on small companies across the UK following the country’s withdrawal from the European Investment Fund. Chancellor of the Exchequer, Philip Hammond, said last year that the British Business Bank stands “ready, willing and able and the Government stands ready to capitalise it to enable it to step into their shoes.”

The fund, which has generated around £600 million a year for small businesses has begun the process of winding down funding for UK firms.

EIF investment dropped significantly in the past 18-months, with just £52 million invested in UK businesses last year. This constitutes a 91% decrease from 2016 despite British taxpayers still continuing to contribute to the fund. British technology investors were told in 2016 that they risked being cut off from the EIF even before Brexit was finalised.

Between 2011 and 2015, more than one-third of investment in budding UK startups has come from the EIF, with over £2 billion invested in various funds.

 

Ross Kelly

Staff Writer

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