Government commits £1bn funding to support startups
Following mounting pressure from the startup ecosystems, the government has announced a new £500m ‘Future Fund’ to be launched in May. The fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.
The fund will be managed by the British Business Bank, and see government committing £250m to be invested in the form of a convertible loan note meaning if the loan is not repaid it will be converted to equity.
It will require businesses to match the government with 50% or more private investment.
Businesses will need to have raised at least £250,000 equity investment in the last 5 years.
Rishi Sunak, the UK Chancellor, said: “Britain is a global leader when it comes to innovation. Our startups 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 scheme is still at an early stage. Further details about this scheme will be published in due course here
Innovate UK to spend £750m
The government also committed to £750m worth of grants and loans to small and medium-sized businesses focusing on research and development via Innovate UK.
The support, focussed on SME’s, means Innovate UK 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. Funding will start to arrive from mid-May.