COVID-hit UK startups cry out for help, as UK gov trails Europe in its response

The UK government is reportedly looking at a range of options to support the startup industry, possibly involving a co-investment model involving state-owned funds (via the British Business Bank) and private VC funds. Investors have been warning that typically loss-making, early-stage startups are at risk of collapse amid the coronavirus crisis. But the moves come far later than generous packages put together by Continental European governments to support their startup sectors.

Ministers understood to be keen to support the strong UK startup and innovation sector and options allegedly being considered include convertible loans, which could either be later repaid or turned into equity stakes owned by the state. This would require matched co-investment with VCs, ensuring only existing venture-backed startups would be eligible.

The FT reports that ministers want to do this on a case-by-case basis and only after companies have first sought fresh capital from private investors.

Also being considered is additional grant funding via InnovateUK, a government body providing support to innovative businesses, and an expansion of R&D tax credits.

However, the scale of any government intervention is expected to be far more modest than the government’s previously announced support for small, medium and large companies and their workers, given investors are normally deep-pocketed and tech startups typically employ far fewer people than traditional industries. By contrast, the French and German governments committed €4bn and €2bn in relief for their respective tech startup sectors.

The proposals under consideration include ones put forward by a number of significant players in the UK tech industry, who jointly launched a campaign over the weekend to pressure the government into creating a support package to aid startups struggling to deal with the COVID-19 crisis.

The move comes in the wake of moves by other European countries, such as France and Germany, which have announced significant initiatives.

The Save Our Startups (SOS) campaign published an open letter to British prime minister Boris Johnson warning the country could “lose a generation of startups and high growth businesses to COVID-19.”

It claims more than 30,000 startups employing some 330,000 people do not qualify for existing support measures and are therefore in jeopardy if new policies are not developed to help them.

The campaign was launched by crowdfunding platform Crowdcube and industry body Coadec, and is supported by leading tech figures including Brent Hoberman, the co-founder of Lastminute.com; Alex Chesterman, the cofounder of Zoopla, LoveFilm and Cazoo; and Arnaud Massenet, cofounder of Net-a-Porter.

It is also joined by organizations including The Entrepreneurs Network, Draper Esprit, Virgin Startups, Vala Capital, Innovate Finance, UK Business Angels Association (UKBAA), EISA, Tech London Advocates, Capital Enterprise and Seedrs .

Jeff Lynn, executive chairman and co-founder of Seedrs, who was a signatory to the letter, commented: “The growth of the startup ecosystem has been one of the great successes of the UK economy over the past decade. All that work is now threatened by COVID-19, and that’s why it is essential that the government step in to help at this precarious time–just as the French and German governments are doing. The Save Our Startups campaign sets out three sensible and crucial requests that will make all the difference in ensuring that our startups can continue to be European and world leaders in the decade ahead. I am very pleased that Seedrs and Coadec, both of which I co-founded and chair, are Founding Partners of the campaign, and I hope everyone in the ecosystem will sign onto it.”

The open letter said: “These businesses are making a huge contribution to the economy but are often yet to make a profit because they are investing in their people, technology and bringing innovative products and services to market. They are highly unlikely to qualify for the Coronavirus Business Interruption Loan Scheme (CBILS), which was introduced to provide financial support for SMEs during this pandemic.”

The letter points out that the French and German Governments have already worked to craft support for startups.

Save Our Startups has a three-point proposal for the government, calling on it to:

• Provide an equity-based liquidity package suitable to save startups at risk. While CBILS covers a proportion of UK businesses, the majority of startups and high-growth companies will be excluded and as a result, unsupported.

• Fast track payments to startups from public funding schemes – in particular, R&D tax credits and Innovate UK funding grants. Private sector liquidity has taken a major hit during the crisis with angels and micro-funds unable to provide startups and high growth businesses with bridging money.

• Change EIS, SEIS and VCTs to stimulate private equity investment into startup and high growth businesses, since many startups are losing access to debt or equity support.

However, some investors are cool on the idea, pointing out that the government could end up owning stakes in companies that would not otherwise have raised private-sector money, and that there should be a natural falling-off of weaker companies at a time of public crisis.

Investor Robin Klein of Localglobe commented on Twitter that: “The UK Govt has done an incredible job supporting the startup ecosystem” but he called the SOS campaign a “knee jerk” reaction and although he was “100% in favour of rapid BBB and other govt support” this would be through established tools.”

The UK Govt has done an incredible job supporting the startup ecosystem: EIS, BBB, InnovateUK, R&D tax credits. 8 out of 10 startups won't reach Series A. Please don't 'knee jerk' react to the call to 'save our startups' by deploying much needed Tax payers ££ directly. — Robin Klein () April 5, 2020

Luke Lang, cofounder of Crowdcube, which initiated the campaign with Coadec, commented: “Other European countries have raced to rescue its startup and tech communities, with French and German Governments committing €6bn in funding. The UK is sluggish by comparison, and further delays are unforgivable and threaten thousands of promising startup and high-growth businesses with huge potential.”

The full letter by Save Our Startups can be read here.

Top 100 Signatories:



Darren Westlake – Co-founder & CEO, Crowdcube

Luke Lang – Co-founder, Crowdcube

Brent Hoberman – Executive Chairman, Founders Forum

Alex Chesterman – Founder & CEO, Cazoo; previously Co-founder LoveFilm and Zoopla

Arnaud Massenet – Co-founder, Net-a-porter

Mike Fuller – Co-founder, ARM

Anthony Fletcher – CEO, Graze

Tania Boler – Founder, Elvie

Giles Andrews – Co-founder, Chairman, Zopa, MarketFinance, Bethnal Green Ventures

Adam Dodds – CEO, Freetrade

Jorge Armanet – CEO Founder, HealthUnlocked

Jamie Ward – CEO, Hussle

Samuel O’Connor – CEO, Coconut

Peter Kelly – CEO, Imployable

Lee Strafford – CEO, ADV

Kirsty Ranger – CEO, IdeaSquares

Gem Misa – CEO, Fullgreen

Doug Monro – Co-founder & CEO, Adzuna

/> Jeff Lynn – Co-founder & Executive Chairman, Seedrs

Stephanie Melodia – Director, Bloom

Tugce Bulut – Founder, Streetbees

Saurav Chopra – Co-founder & CEO, Perkbox

Daniel Korski – Founder & CEO, PUBLIC

David Dunn – Chair, UK Tech Cluster Group

Philip Salter – Founder, The Entrepreneurs Network

Andrew Tibbitts, COO, TechHub Charlotte Crosswell – CEO, Innovate Finance

Robert Walsh – Managing Partner, Q Ventures

Jenny Tooth OBE – CEO, UKBAA

Jonathan Sibilia – Partner, Draper Esprit

Dom Hallas – Executive Director, The Coalition for a Digital Economy (Coadec)

John Spindler – Co-founder & CEO, Capital Enterprise

Mark Brownridge – Director General, EIS Association

Natasha Guerra – Co-founder, Runway East

Andy Fishburn – Managing Director, Virgin Startup

Russ Shaw – Founder, Tech London Advocates

Alex Davies – Founder & Chief Executive, Wealth Club

Bruce Davies – Director, UK Crowdfunding Association

Andrew Roughan – Managing Director, Plexal

Jasper Smith – Founder, Vala Capital

Gaby Hersham – Founder, Huckletree

Carlos Silva – Co-founder, Seedrs

Yacob Siadatan- CEO, Ventoura Ltd

Nazim Valimahomed – CEO, Kroo

Katie Vanneck smith – Co-founder, Tortoise Media

Adrian James – CEO, Monily

Paul Naha-Biswas – CEO, Sixley

Oliver Oram – CEO, Chainvine

Rohit Shetty – Co-Founder & CEO, ArtBrowser

Richard Cooper – Chief Executive Officer, Novosound Ltd

Sam Lehane – CEO, M.Y.O

David Murray-Hundley – Chairman, E fundamentals

Russell Quirk – Co-Founder, PropergandaPR

Silas Adekunle – CEO, Reach Industries

Matthew Bradley – CEO, Mjp technologies ltd

Charlotte Roach – CEO, Rabble

Ankush Bhatia – CFO, Hussle

Matt Latham – Co-founder, Tickr ltd

Joseph Crabtree – CEO, Additive Manufacturing Technologies (AMT)

Robert Wakeling – CEO, Wadaro Solutions Limited

Joe Sillett – CEO, The Funky Appliance Company

Mike Bristow – CEO, CrowdProperty

Mulenga Agley – CEO, Growthcurve LTD

Kim Nilsson – CEO & Founder, Pivigo

Martin Kievit – Co-founder, Metasite OpenCloud limited

Sam Ducker – Co-founder, Calling Anyone

Neha Khurana – CEO, The Legists

Matt Brooke – CEO, Meet.mba Limited

Manoj Ganapathy – CEO, SalesTrip

Adam McVicar – Co-founder, The Resilience Factor

Bikesh Kumar – CEO, Annexon

Ricky Shankar – Chairman, Clear Factor Limited

Sarah Merrick – CEO, Ripple Energy

Dan Wakerley – CEO, Pillar

Demos Demetriou- Co-founder, blazon

Eoin Cooney – CEO, ARROE Limited

Mattt Milligan – Co-founder, Uhubs

Suchit Punnose – CEO, Red Ribbon Asset Management Plc

Laurence Guy – CEO, We Are Pentagon Group

Fred Soneya – Co-Founder & Partner, Haatch

Dana Denis-Smith – CEO, Obelisk support

Neil Harmsworth – Chief Operating Officer, Hussle

Nigel Winship – Co-founder, People Matter Technology

Cathy Norbury – Co-Founder, InterAxS Global

Shadi Razak – Co-founder and CTO, CyNation

Hassan Bashir – Co-founder, HealthSteer

Dr Yusuf Vali – Co-founder, Healthsteer

Farid Haque – Co-founder, AssetVault

Brad Goodall – CEO, Banked

Dan McGuire – CEO, cube19

Gaute Juliussen – CEO, Toraphene

Mark Musson – CEO, Humn.ai Ltd

James Gupta – CEO, Synap

Mat Megens – CEO, Hyperjar

Jason Bullock – CEO, Numerous Technology

Tim Gentles – CEO, Hatriq

Marcus Greenwood – CEO, UBIO

Gary Mc Donald – CEO, Limitless Insight

Ryan Gralia – CFO, Fidel Limited

Darrell Coker – Co-founder & Head of Product, Flair

Inga Mullins – Co-founder Fluency

Ian Smith – CEO, Being Guided

Kevin Beales – CEO, Refract

Damian Goryszewski – CEO, Colossus Capital Ltd

Mark Milton – CEO, Amberlight Partners

Randel Darby – CEO, Airportr

Source: TechCrunch

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