Start-up funding a belated but vital shot in the arm for UK tech and life sciences
Following the announcement of the £1.25bn relief package for start-ups Laurence Whitehead, partner at MHA MacIntyre Hudson, says the funding is vital to support tech and life science sectors but the access criteria should be reconsidered.
Start-up businesses, especially those in the tech space, don’t necessarily make a profit so they can’t qualify for bank loans, but fast-growing companies, with innovative research, are obvious candidates for support through the pandemic.
The Chancellor’s plan does go some way to protect the most dynamic sectors of the UK economy, including tech and life sciences, however one aspect of the scheme that should be reviewed is the access criteria. The chancellor’s plan offers access to the debt funding facility backed by the government to companies that have previously raised at least £250,000 in equity finance.
Relying on previous equity funding as the main criteria for investment will inevitably exclude many businesses that could well succeed if funded now, but that have not previously received equity backing from investors at this level, if at all.
The UK has lagged France and Germany in addressing the issue of start-up funding as part of Covid-19 support measures; with France and Germany putting €4bn and €2bn respectively into start-up schemes several weeks ago. It’s a relief the UK has finally homed in on this vital issue, but more flexibility is required.
