UK businesses driving innovation and development will be helped through the coronavirus outbreak with the announcement of a £1.25billion government support package, the Chancellor announced today.
Rishi Sunak said the targeted and tailored help would ensure firms in some of the most-dynamic sectors of the UK economy – ranging from technology to life sciences, both of which have a huge impact on the healthcare sector – are protected through the crisis so they can continue to develop innovative new products and help power UK growth.
The comprehensive 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 businesses focusing on research and development.
Sunak said: “Britain is a global leader when it comes to innovation. 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 funding will protect high-growth businesses and enable the unicorns of tomorrow to thrive so that tech is in pole position to drive our post-COVID recovery
“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.”
Alok Sharma, Business Secretary, added: “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.
“This wide-ranging package delivers important help that will protect some of the most-dynamic sectors of our economy.
And Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden, said it would be particularly crucial for the technology industry, which has come to the fore during the coronavirus outbreak, in particular helping the NHS to cope with the added pressures.
He adds: “We are the tech and creative capital of Europe, and it’s crucial to maintain our place.
“This funding will protect high-growth businesses and enable the unicorns of tomorrow to thrive so that tech is in pole position to drive our post-COVID recovery.”
The £500m Future Fund has been designed to ensure high-growth companies across the UK receive the investment they need to continue during the crisis.
Delivered in partnership with the British Business Bank. and launching in May, it will provide UK-based companies with between £125,000-£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 raised at least £250,000 in equity investment from third-party investors in the last five years.
The Government is committing an initial £250m in funding towards the scheme, which will initially be open until the end of September.
And the scale of the fund will be kept under review.
The £750m of targeted support for the most-R&D-intensive small and medium-size firms will be available through Innovate UK’s grants and loan scheme.
The national innovation agency will accelerate up to £200m of grant and loan payments for its 2,500 existing customers on an opt-in basis.
Healthcare is seeing a paradigm shift in the adoption of technology due to coronavirus and we expect this will accelerate and become normalised post pandemic, enabling healthcare to be delivered in a safe, scalable and efficient way, while improving the patient experience
An extra £550m will also be made available to increase support for existing customers, and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding.
The first payments will be made by mid-May.
This package builds on the Government’s existing support for innovative, high-growth firms including the £2.5billion British Patient Capital Fund, the upcoming £200m Life Sciences Investment Programme, internationally-competitive R&D tax reliefs, and major commitments to increase public R&D spending to £22billion by 2024-25.
Welcoming the announcement, Sir Mark Walport, chief executive of UK Research and Innovation, said: “As an important part of this support package for innovative firms, Innovate UK will provide immediate cashflow support to small companies who are developing the products and services of the future, to continue this work throughout the crisis and be an engine for growth once the outbreak is over.”
Julian David, techUK chife executive, added: “The UK’s tech sector has been working with the Government and the NHS to contribute to the COVID crisis response and this scheme will help ensure that more of these companies are able to survive to help UK communities and the economy recover post-crisis.”
Careology is one company looking to benefit from the fund. It provides innovative technological tools to help cancer patients, their families and medics. These include mobile solutions for keeping track of a patient’s condition, managing medication, and tracking appointments etc.
The company’s chief executive, Paul Landau, said: “The importance of the Government’s Future Fund cannot be underestimated.
This financial support will help protect many of the UK’s most-promising start-ups, ensuring they continue to lead the way with much-needed innovation. It will also safeguard the positive impact start-ups can have on our country’s future economy.”
The UK’s tech sector has been working with the Government and the NHS to contribute to the COVID crisis response and this scheme will help ensure that more of these companies are able to survive to help UK communities and the economy recover post-crisis
He added: "Healthcare is seeing a paradigm shift in the adoption of technology due to coronavirus and we expect this will accelerate and become normalised post pandemic, enabling healthcare to be delivered in a safe, scalable and efficient way, while improving the patient experience. This change is only achievable with the innovation underpinned by technology.
"The match funding structure provides a simple ‘acid test’ for the venture’s potential. However, question marks do exist as to how it will be received by investors who are often attracted by EIS tax incentives, which we assume will not apply to this structure. We see the Future Fund as a welcome initiative and look forward to learning more about the details.”
