Coronavirus: Generation of Startups Could Be “Wiped Out” Without Government Bailout | Scientific and technological news

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Seven tech industry organizations are calling on the government to provide £ 300 million to support start-ups during the coronavirus crisis.

A generation of them will be “wiped out” if they are not helped quickly during the COVID-19 pandemic, Chancellor Rishi Sunak has been notified.

The tech industry is warning that a generation of start-ups will be wiped out & # 39; without government assistance
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The tech industry is warning that a generation of start-ups will be “wiped out” without the help of ministers. Photo file

This includes several medical start-ups that could directly or indirectly ease the burden of the NHS as it struggles to cope with the epidemic.

In a letter published by Sky News, seven of the UK’s main tech lobbies warn the Treasury that £ 300 million in funding is needed to protect “the future of British innovation” .

Sunak created the Coronavirus Business Interruption Loan Scheme (CBILS) in early March to provide loans of up to £ 5 million to small businesses across the UK.

Chancellor Rishi Sunak
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Rishi Sunak has created a program to provide loans of up to £ 5 million to small businesses

But industry bodies argue that loss-making businesses – a category that includes almost all start-up and fast-growing start-ups – do not qualify for these facilities, a fact she claims to have confirmed with lenders on the CBILS diet.

Dom Hallas, executive director of the Coalition for a Digital Economy (Coadec), which represents small start-ups, told Sky News that he thought up to 1,300 businesses were at risk because they weren’t able to raise new financing from venture capitalists. .



Chancellor Rishi Sunak speaking at a press conference in Downing Street, London, on the coronavirus (COVID-19). Date of the photo: Tuesday, March 17, 2020. See the history of the AP HEALTH Coronavirus. Photo credit should read: Matt Dunham / PA Wire

Rishi Sunak presents huge economic measures

“It’s a huge problem right now, no one will make new deals,” he said.

“An entire cohort of start-ups will be wiped out. “

One company at risk is Juno, which was raising start-up funds for the technology it developed to “decode” vaginal microbiomes when the virus crisis erupted.

“We are in a very delicate environment trying to navigate the start-up phase during a pandemic,” company co-founder Hana Janebdar told Sky News.

He added: “It would be a shame if start-ups actively trying to close the gender health gap, creating an innovation that is very necessary for the health of women, did not materialize. “

Another medical start-up, which did not want to reveal its name for fear of upsetting the venture capitalists, confirmed to Sky News that its funding had been withdrawn, even if the demand for its telemedicine service was higher than ever.

Industry groups, including Tech Nation, a start-up support organization that receives £ 7.1 million in government funding, are calling for the Treasury to create a new “Runway Fund”.

The plan would include an investment of £ 300 million through the British Business Bank, which would give the bank equity in start-ups, which means the government could potentially make a profit from the bailout. .

Alongside Coadec, the industrial organizations that signed the open letter are: Innovate Finance; Tech Nation; President of the UK Tech Cluster Group; InsurTech UK; Tech London Advocates; and Global Tech Advocates.

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A HM Treasury spokesperson told Sky News, “The Chancellor has made it clear that we must all play our part in the national effort to support businesses and protect jobs.

“This is why we are taking unprecedented steps and have announced £ 330 billion in loans and guarantees to companies, paying 80% of the wages of workers on leave for three months, VAT and tax deferrals, in introducing cash grants of up to £ 25,000 for small businesses. and cover the cost of statutory sickness benefit.

“We are working with the financial services sector to ensure that businesses benefit fully from this support. “

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