British Treasury Chancellor Rishi Sunak takes part in the national “cotton for guardians” to express gratitude for the work of the National Health Service of Great Britain (NHS) and advanced medical personnel throughout the country fighting the coronavirus pandemic on the steps of the Ministry of Foreign Affairs and Commonwealth Affairs (FCO) April 16, 2020 in London.
Tolga Akmen | WPA Pool | Getty images
The US 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 created by the UK Treasury in April to provide a lifebuoy for unprofitable technology firms unable to access other emergency financing initiatives. Although the government allocated billions of pounds for emergency loans to firms affected by the crisis, startups said that this did not apply to them, as they had to prove a history of stable profits. Many venture capital funded startups are operating at a loss to accelerate growth.
But leaders in the high-tech industry are urging Prime Minister Boris Johnson’s administration to relax eligibility criteria for the Future Fund so that companies involved in accelerator programs such as Y Combinator can contact them. Such initiatives require startups to have parent companies located outside the UK to register.
Under this initiative, startups should force their venture investors to apply for interim funding from the government. The funds are managed by the state-owned British Business Bank in the form of convertible bonds, which become equity shares in the next round of startup financing. The theory is that this allows the government to subsequently profit from future investments. ,
The £ 500 million fund ($ 614 million) consists of a Treasury obligation of £ 250 million, which is in line with private sector funding. So far, startups have received £ 320 million in support through this initiative, and the government says it is ready to increase the size of the fund if necessary.
“Our startups and innovative firms are one of our strong economic opportunities,” British Finance Minister Rishi Sunak said in a statement on Tuesday. “When we start to bounce back from the coronavirus, they will help accelerate our recovery and create new jobs. This change means that those startups that aspired to be the best and took advantage of the opportunities to grow their businesses will benefit from our world’s leading Future Fund. “
Germany and France have taken similar measures to provide their startups with constant access to capital, as the Covid-19 crisis prevents young technology firms from raising money. Meanwhile, the European Union reportedly seek to relax their rules of state aid in order to help start-ups based in member countries to receive state support.