The government has launched a £1.25bn support package for innovative start-ups.
Delivered in partnership with the British Business Bank and launching in May, the fund will provide UK-based companies with between £125,000 and £5m from the government, with private investors at least matching the government commitment.
These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.
To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third party investors in the past five years.
The package includes a new £500m loan scheme for high-growth firms, called the Future Fund, and £750m of targeted support for small- and medium-sized enterprises (SMEs) focusing on research and development, available through Innovate UK’s grants and loan scheme.
“Britain is a global leader when it comes to innovation,” said Chancellor Rishi Sunak (pictured).
“Our start-ups 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 government is committing an initial £250m in funding towards the scheme, which will initially be open until the end of September.
The scale of the fund will be kept under review.
“The UK is a world leader in innovation and at this hugely challenging time, we know that young, fast-growing firms require tailored support to see them through,” said Alok Sharma, business secretary.
“This wide-ranging package delivers important help that will protect some of the most dynamic sectors of our economy.”
Charlotte Crosswell, chief executive of Innovate Finance, welcomed the chancellor’s announcements.
“These new measures will help fintech businesses to raise the funds needed to survive the crisis,” she said.
“It will support a sector full of early stage companies, which are more prone to struggle in these volatile times.
“The UK is already known globally as a leader in fintech and we want to ensure companies have support and funding in place to continue their development at this crucial time.”
The government’s support package follows the Save Our Start-ups campaign, backed by peer-to-peer platform Simple Crowdfunding.