The UK Treasury today announced a new package of relief measures to support UK startups. Here are some interesting insights from four UK business leaders regarding Future Fund.
Nic Redfern, Finance Director at KnowYourMoney.co.uk:
“Startups and small businesses will be relieved to see the Treasury make this decision. All the evidence – albeit largely anecdotal at this stage – suggests that a great many startups are struggling to find the capital they need to stay afloat.
“With small or non-existent turnover, it is often incredibly difficult for startups to access business loans. This is a serious problem in the current climate and, as such, introducing solutions like co-investment and convertible loans must be welcomed.
“Collaboration between the public and private sectors is more important than ever. And it seems the Government is now acutely aware that it must engage private investors, VCs and funds if it is to get enough capital to the promising startups who need it to survive.”
Atul Bhakta, CEO of One World Express:
“Unprecedented – that is the word of the moment. Rightly so, given there is absolutely no blueprint for how governments or businesses should be managing this crisis. Yet, I believe the UK Government deserves praise, and this latest update is certainly positive.
“After all, the UK is a global leader for entrepreneurship and startup innovation – we cannot let these exciting new businesses die before they even get off the ground. A huge amount of energy and resource must go towards helping them through this unprecedented period as they will be the ones who strengthen the national economy in the years to come.”
Ritam Gandhi, Founder and Director, Studio Graphene:
“The nation’s early stage businesses have been in limbo for too long, with many deliberately loss-making startups falling between the cracks of state-backed loan schemes.
“I welcome the new relief proposals, which aim to give fledgling UK companies some financial breathing room while they ride out the storm. Government support is needed now more than ever before; indeed, a recent poll conducted by Studio Graphene found that 69% of UK tech startups do not have faith in the Government’s ability to support the private sector through the pandemic. This is a startling statistic and one that reflects the lack of cohesive advice given to date.
“New measures like the Future Fund unveiled today could reverse this sentiment and settle some nerves. However, I would urge the Government to do more still. It must demonstrate that it is willing to do whatever it takes to protect innovative UK businesses and sustain them through what is probably the biggest challenge they have ever faced.”
James Tucker, CEO of Twenty7Tec:
“This has to be a welcome move for both tech and research-led businesses. Many of them are loss-making in their first years and so need firm backing from business angels, early investors and venture capitalists. The challenge for tech businesses is that there has been less appetite for risk over recent weeks, for obvious reasons. But this move by the Chancellor using convertible loans looks set to plug a gap in the market and give a real boost to the companies that will emerge as the tech stars of the future.
“If you’ve got a track record of raising capital and want to shore up confidence in the business, the Future Fund looks like a good way of doing so. For many start-ups, this will be a massive lifeline. We’re waiting to see the full details on how the fund will work, but at first blush, the terms seem reasonable – 36 month maximum term, convertible loan that must be equally or better matched by private funding.
“If smaller companies are struggling, I’d suggest that they speak to their funders as soon as possible and talk to them about how these matched funds will work from May onwards and explore how to fill any gaps between now and then.”