The UK government is set to take a stake in hundreds of high-growth British startups after launching a plan to save the sector from the brink of financial collapse.
Following weeks of negotiations with entrepreneurs, investors and trade associations, the Treasury has this morning (20 April) unveiled a £1.25bn package to support tech startups and firms specialising in research and development.
The package is divided into two pots: a £500m loan scheme for startups, called “Future Fund”, investment in which will be divided evenly between the Treasury and private investors, and £750m of “targeted support” for small and medium-sized companies focused on R&D.
The Future Fund loans, which must be matched by investors, will automatically convert into equity if they haven’t been paid off by the time of the next funding round, or the end of the loan’s lifetime.
The Chancellor Rishi Sunak said: “Our startups 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.”