After weeks of lobbying, our friends over at Coadec, with support from the ecosystem have secured a deal that allows tech startups to access cash during the coronavirus crisis!
Via the 'Save our Startups' campaign, the ecosystem have been hounding Government Ministers, senior officials, civil servants and MPs for an equity-based financing solution, and this has resulted in a vital lifeline for venture-backed startups up and down the country.
There will be two new strands to the Government startup support:
1) A new ‘Future Fund’ will invest between £125,000 and £5 million in qualifying startups.
2) An extra £750 million for Innovate UK to provide liquidity through grants and loans.
Under the new Future Fund startups will be able to access cash through a new convertible loan program from the British Business Bank. By allowing startups to access loans by converting debt into equity if they are not repaid, the Future Fund will allow venture-backed businesses to access a pot of £500 million in liquidity.
To be eligible, your 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 last five years.
The Government will match private investment on a 1:1 basis up to a maximum of £5 million, and a minimum of £125,000. Coadec are now working with the Government and the British Business Bank to ensure the scheme is open to the widest possible amount of investors, and that the delivery mechanism functions effectively.
In addition, using Innovate UK and other funding vehicles to push support to startups was another of their key asks, and now the Government has allocated Innovate UK £750million to provide additional liquidity.
This includes £550million of new funding to support R&D activity, and £175,000 of support will be offered to startups who do not currently receive Innovate UK funding. Importantly, £200million of grant and loan payments will be accelerated to existing Innovate UK customers on an opt-in basis. The Treasury has also committed HMRC to speed up the payment of tax credits.
We'll update with more details once we have them in a couple of days. Check out Coadec for up to date news.