The UK’s technology industry is calling for Government support to bail out start-ups that it fears could collapse in the coming months due to the disruption to economic activity caused by the coronavirus pandemic.
The move comes amid widespread concerns that most tech start-ups will not qualify for the Government-backed Coronavirus Business Interruption Loans, as they are not yet profitable.
Seven industry groups, including Innovate Finance, Tech Nation, InsurTech UK; Tech London Advocates and TechUK, have signed an open letter to Chancellor Rishi Sunak calling for the creation of a £300 million fund to help them continue operating.
The proposed "runway fund" would allocate loans that then convert into equity stakes at a company’s next financing round.
Dom Hallas, executive director of The Coalition for a Digital Economy, which represents smaller start-ups, told Sky News that he believes as many as 1,300 firms are at risk, because they are unable to raise new funding from venture capitalists.
He added: "It’s a huge problem right now, no one will do new deals. An entire cohort of start-ups will be wiped out."
Meanwhile, the charity sector is also calling for a dedicated emergency package to plug what has been estimated to be a £4.3bn fall in income of over the next three months.
The campaign, set up by four umbrella bodies the National Council for Voluntary Organisations, the Charity Finance Group, Acevo and the Institute of Fundraising under the hashtag #EveryDayCounts, has asked the Government to provide funding for front-line charities and volunteers who are supporting the coronavirus response.
They too have asked the Government to set up a “stabilisation fund” for all charities to help them stay afloat, pay staff and continue operating during the course of the pandemic.
Over 300 MPs and peers have signed a letter to the Chancellor calling for immediate support for charities.