British Chancellor of the Exchequer Rishi Sunak participates in a national "Clap for Carers" to thank the work of British National Health Service (NHS) and frontline medical staff across the country on the steps against the Coronavirus pandemic fight of the Foreign and Commonwealth Office (FCO) on April 16, 2020 in London.
Tolga Akmen | WPA Pool | Getty Images
The UK government has expanded its rescue package for startups affected by the coronavirus pandemic to include companies whose parent companies are based abroad.
The so-called Future Fund was launched by the UK Treasury in April to provide a lifeline for unprofitable technology companies that do not have access to other aid financing programs. Even though the government provided billions of pounds in emergency loans to companies affected by the crisis, startups said they didn't because they had to show a history of constant profits. Many venture capital-backed startups are working at a loss to accelerate growth.
Leading companies in the technology industry, however, urged Prime Minister Boris Johnson's government to relax eligibility criteria for the Future Fund so that companies participating in accelerator programs such as Y Combinator can apply. For such initiatives, start-ups must have parent companies outside the UK to enroll.
As part of the Future Fund program, startups need to get their venture capital investors to apply for bridge funding from the government. The funds are managed by the state-owned British Business Bank in the form of convertible bonds, which will become investments in the next round of financing by a start-up. The theory says that this enables the government to later return on the investment.
The £ 500 million ($ 614 million) fund consists of a £ 250 million pledge from the Treasury, supplemented by private sector funding. Start-ups have so far received £ 320 million in support from the initiative and the government has said it is ready to increase the size of the fund if necessary.
"Our startups and innovative companies are one of our great economic strengths," said British Finance Minister Rishi Sunak in a statement on Tuesday. "When we start to recover from coronavirus, it will help us recover and create new jobs. This change means that those startups that have striven to be the best and have taken the opportunity grow their business, benefit from it. " from our world's leading future fund. "
Germany and France have taken similar measures to give their startups continuous access to capital, as the Covid 19 crisis has made it harder for younger technology companies to raise money. In the meantime, the European Union is reportedly trying to relax its state aid rules to allow technology start-ups based in the member countries to access state support.