Some of the most influential figures in UK tech have backed a campaign to push the government to follow France and Germany in announcing a support package for startups to deal with the Covid-19 crisis.
The Save Our Startups (SOS) campaign, launched on Sunday, has warned that many of the 30,000 startups and high-growth businesses in the UK, who employ nearly 330,000 people, do not qualify for existing support measures and so could collapse unless new policies are put in place to support them.
In an open letter to British prime minister Boris Johnson, the high-level group warned that, as a result, the country could “lose a generation of startups and high growth businesses to Covid-19” and fall behind the rest of Europe in terms of innovation.
The campaign — launched by crowdfunding platform Crowdcube — is being supported by figures such as Brent Hoberman, the cofounder of Lastminute.com; Alex Chesterman, the cofounder of Zoopla, LoveFilm and Cazoo; and Arnaud Massenet, cofounder of Net-a-Porter.
Over 20 industry bodies and organisations have also joined the campaign — including The Entrepreneurs Network, Draper Esprit, Virgin Startups, Vala Capital, Innovate Finance, Runway East, UK Business Angels Association (UKBAA), EISA, Tech London Advocates, Capital Enterprise, Seedrs and Coadec.
The open letter contrasts the actions of the UK government with that of those of France and Germany, which have “raced to the rescue” of its startups and tech communities by committing billions in funding.
In the last two weeks, the French and German governments have become the poster children of the European startup community, respectively committing €4bn and €2bn in specific relief for the sector. Many in the UK tech community now want something similar.
The Save Our Startups group says that while the UK government’s Coronavirus Business Interruption Loan Scheme (CBILS), which was introduced to provide financial support for small and medium-sized enterprises (SMEs) during the pandemic, is positive, in practice many startups will not be covered as they are loss-making.
The campaign is, therefore, calling on the UK government to provide an equity-based liquidity package designed specifically for startups to save those at risk of collapse.
Secondly, the group calls on the government to fast track payments to startups from public funding schemes — in particular, R&D tax credits and Innovate UK funding grants.
The third call is for the government to change rules for the existing Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT) schemes (which incentivise private investment into startups through tax breaks) to make them more advantageous for this difficult period.
However, the call for more action has already proved controversial.
Robin Klein, the cofounder of seed-stage venture capital firm Local Globe said that we should refrain from “knee jerk” responses to give away taxpayer money to startups. “Please don’t ‘knee jerk’ react to the call to ‘save our startups’ by deploying much needed Tax payers ££ directly,” he said in a Tweet.
Other UK tech figures such as Matt Clifford, the cofounder of startup builder Entrepreneur First, and James Wise, a venture capitalist at Balderton Capital, have also called for caution in the government getting too involved in financially supporting startups.
On Sunday, Wise said on Twitter: “Govt fund that ends up owning stakes only in those Cos where private investors will no longer act could be a disaster for the tech sector and public finances in the long run.”
The full letter by Save Our Startups can be read here. And the list of signatories is below. For more on the various responses of European government to help startups amid coronavirus, see our resource here. And for more Sifted coronavirus coverage, see here.
List of signatories:
Darren Westlake — cofounder and chief executive, Crowdcube
Luke Lang — cofounder, Crowdcube
Brent Hoberman, Executive Chairman, Founders Forum; previously Co-Founder, Lastminute.com
Alex Chesterman — founder and chief executive, Cazoo; previously cofounder, LoveFilm and Zoopla
Arnaud Massenet — cofounder, Net-a-Porter
Mike Muller — cofounder, ARM
Anthony Fletcher — chief executive, Graze
Tania Boler — founder, Elvie
Doug Monro — cofounder and chief executive, Adzuna
Jeff Lynn — cofounder and executive chairman, Seedrs
Saurav Chopra — cofounder and chief executive, Perkbox
Daniel Korski — founder and chief executive, PUBLIC
David Dunn — chair, UK Tech Cluster Group
Philip Salter — founder, The Entrepreneurs Network
Andrew Tibbitts — chief operating officer, TechHub
Charlotte Crosswell — chief executive, Innovate Finance
Jenny Tooth OBE — chief executive, UKBAA
Jonathan Sibilia — partner, Draper Esprit
Dom Hallas — executive director, The Coalition for a Digital Economy (Coadec)
John Spindler — cofounder and chief executive, Capital Enterprise
Mark Brownridge — director general, EIS Association
Natasha Guerra — cofounder, Runway East
Andy Fishburn — managing director, Virgin Startup
Russ Shaw — founder, Tech London Advocates
Alex Davies — founder and chief executive, Wealth Club
Bruce Davies — director, UK Crowdfunding Association
Andrew Roughan — managing director, Plexal
Jasper Smith — founder, Vala Capital
Gaby Hersham — founder, Huckletree
Carlos Silva — cofounder, Seedrs
Robert Walsh — managing partner, Q Ventures