TLA: UK's startup ecosystem needs government support
Early-stage businesses must be included in the chancellor's loan scheme, says Tech London Advocates
Tech London Advocates (TLA) is urging the government to include loss-making businesses in its £330 billion loan scheme to protect the UK's tech sector.
More must be done to help these early-stage startups at what is a critical time, according to the founder of TLA, Russ Shaw.
Chancellor Rishi Sunak announced a support package for businesses to keep them afloat during the coronavirus pandemic. To be eligible for it, however, the Bank of England is asking for businesses to show at least three years of profitability, which puts tech startups at a bit of a disadvantage.
Early-stage businesses are a large part of the success of the UK's tech sector, which has seen rapid growth, consistent recognition as a leader in areas such as AI and fintech and has even managed to attract large investment during Brexit. But many of its SMBs will collapse without financial protection, potentially curtailing one of the UK's most lucrative economies.
"The Chancellor must immediately open government-backed loans to be inclusive of loss-making companies to underpin the thriving, vibrant and innovative tech ecosystem that the UK is renowned for," Shaw told IT Pro. "The idea is not a novel one as we are seeing countries across Europe are doing it. France, for instance, is already offering support that its start-up ecosystem needs during these unprecedented times. The UK must do the same." Shaw called these early-stage businesses a "pipeline of innovation and growth", comparing them to Monzo and Revolut - firms that have attracted lots of investment over the last couple of years, reaching unicorn status, but are still to turn profitable. As lockdown continues due to the coronavirus, many businesses are facing prolonged periods of uncertainty and even closure with the economy as a whole set to take a big hit. While the government has pledged to help out, TLA is urging it to show support for the tech SMBs that have helped the country's tech sector to flourish. "We have to work on guaranteeing their survival by acting definitively and quickly with the liquidity support these firms need immediately," Shaw added.