By John Reynolds on Monday 6 April 2020
The campaign has been supported by entrepreneurs and industry bodies.
Equity crowdfunding platform Crowdcube has penned an Open Letter to Prime Minister Boris Johnson saying that entrepreneurs "are being forgotten" during the coronavirus crisis which "threatens" the future of the UK's startup industry.
The letter forms part of Crowdcube's Save our Startups campaign which launches today (Monday) and is supported by several entrepreneurs including Brent Hoberman, co-founder of Lastminute.com; Alex Chesterman, co-founder of Zoopla, LoveFilm and Cazoo; and Arnaud Massenet, co-founder of Net-a-porter.
Over 20 industry bodies and organisations have also joined the campaign including The Entrepreneurs Network, Draper Esprit, Virgin Startups, Innovate Finance, Runway East, UKBAA, EISA, Tech London Advocates, Capital Enterprise, Seedrs and Coadec.
The letter outlines what the campaigners argue needs to be done to protect Britain's entrepreneurial future from the economic crisis caused by Covid-19. Crowdcube is headed up by CEO Darren Westlake (pictured).
It says the government should follow the lead of Germany and France, which have committed a combined €6bn in funding to support startup businesses.
The letter says that the 30,000 startup and high-growth businesses in the UK, who employ nearly 330,000 people, are "highly unlikely" to qualify for the Coronavirus Business Interruption Loan Scheme (CBILS), which was introduced to provide financial support for SMEs during this pandemic.
The campaign has now put forward a three-point plan to protect these businesses:
-The Government needs to provide an equity-based liquidity package suitable to save startups at risk.
-The Government must fast track payments to startups from public funding schemes - in particular, R&D tax credits and Innovate UK funding grants.
-The Government must change EIS, SEIS and VCTs to stimulate private equity investment into startup and high-growth businesses.
Below is the full letter sent to the Prime Minister:
The Open Letter to Boris Johnson
Britain has a proud history of innovation, enterprise and entrepreneurship. However, today’s entrepreneurs are being forgotten during the Covid-19 crisis, which threatens their existence. We all want a swift end to this health crisis but we also desperately need to protect the future of our economy during these challenging times.
Today, there are almost 30,000 startup and high-growth businesses in the UK who employ nearly 330,000 people*. These businesses are making a huge contribution to the economy but are often yet to make a profit because they are investing in their people, technology and bringing innovative products and services to market.
They are highly unlikely to qualify for the Coronavirus Business Interruption Loan Scheme (CBILS), which was introduced to provide financial support for SMEs during this pandemic.
The French and German Governments have already worked to craft support that can help their startup ecosystems through the crisis. This three-point plan outlines what needs to be done to protect Britain’s startup and high growth businesses:
The Government needs to provide an equity based liquidity package suitable to save startups at risk. While the CBILS covers a proportion of UK businesses, the majority of startups and high-growth companies will be excluded and as a result, unsupported.
Without support, thousands of startups will fold in the coming months. The Government should provide a fresh capital injection for startup and high growth businesses through an equity-based solution.
The Government must fast track payments to startups from public funding schemes - in particular R&D tax credits and Innovate UK funding grants. Private sector liquidity has taken a major hit during the crisis with angels and micro-funds unable to provide startups and high growth businesses with bridging money.
It is within the Government’s power to provide these companies with immediate liquidity by expediting the release of these funds.
The Government must change EIS, SEIS and VCTs to stimulate private equity investment into startup and high growth businesses. Startups are in freefall as they have been left without any debt or equity support.
They will need to be able to access more investment from existing investors through Government schemes. If companies and investors are going to recover from this time of great uncertainty, they need a much stronger incentive than currently exists.
The UK Government must act now to protect Britain’s entrepreneurial future so we do not lose a generation of startups and high growth businesses to COVID-19.