The Save Our Start-ups campaign has welcomed the government’s efforts to support start-ups, which include a £500m future fund to fill the fintech funding gap during the pandemic.
The campaign sent an open letter to the government last month, backed by peer-to-peer lending platform Simple Crowdfunding, calling for support for start-ups during the public health crisis.
The government then announced £1.25bn in funding for innovative start-ups on 20 April.
Included within this funding package is the government’s £500m future fund, which offers government-backed loans for start-ups ranging from £125,000 to £5m, subject to at least equal match funding from private investors.
Since the funding package was announced, the Save Our Start-ups campaign has been lobbying the government for the fast and efficient delivery of funds.
A number of peer-to-peer industry stakeholders have supported the campaign by signing its original open letter to the government.
Some of these included: Giles Andrews, co-founder and director of Zopa and chairman of MarketFinance; Peter Behrens, chief commercial officer of RateSetter and Mike Bristow, chief executive of CrowdProperty.
“The government was very engaged and keen to understand from the community what was needed and what would be best, so overall there was positive engagement throughout,” said Jeff Lynn, executive chairman and co-founder of equity crowdfunding platform Seedrs, who is involved heavily with the campaign.
“As the official campaign the major activity was to get this support announced and now various members have been engaged in major aspects and by and large everyone is happy what what’s come out so far.
“It’s only been 48 hours since the future fund opened for applications and there’s been huge demand but no money deployed yet so we have to reserve full judgement, but from everything I’ve seen about the process and final implementation I’d say we’re highly encouraged.”
Lynn welcomed the future fund and its delivery for filling the gap in funding for fintechs.
“Private funding for fintechs has slowed down because of economic uncertainty with people sitting on cash rather than investing, so a matchmaking fund like this is so important,” Lynn said.
“It’s a really important initiative. I think it will be in many ways it will be the saviour and buy a number of years for the tech ecosystem.”
The future fund has come under fire for not providing enough money to innovative firms.
However, Lynn believes Chancellor Rishi Sunak will come through with his promise in the House of Commons, that if the demand is sufficient for the future fund he will expand the pool of money.
“The demand is there and they’ve dealt honestly and straightforwardly with us throughout the process so we’re expecting the money,” Lynn said.
“The pot has to get bigger.”
Lynn said that it was disappointing the government did not apply Enterprise Investment Scheme (EIS) tax relief to the funding for the scheme but said there are several future fund campaigns already live on Seedrs that have raised money from a mix of investors.
“Anyone can effectively put money in the scheme as part of private match funding, it’s really important and good to do,” he said.
“It’s disappointing there’s a lack of EIS tax relief, and it may put some investors off in practice, but many have and will invest in the product, even without the government tax relief.”