UK tech startups plead for government financial help
A letter to the chancellor warns of risk to tech sector if loss-making firms are not saved from the looming economic downturn
A cohort of UK tech startups has written a letter to the chancellor Rishi Sunak calling on the government to help early-stage businesses find financial aid during the coronavirus pandemic.
The letter, seen by City AM, has been signed by the bosses of companies such as Benevolent AI and Darktrace and warns that the UK's tech sector is at risk if fast-growing, loss-making businesses are not helped out.
Sunak recently announced a £330 billion support package for businesses to ease the economic impact of the coronavirus lockdown. However, firms have to show three years of profitability to be eligible, something which is difficult for many tech startups that spend heavily in their first few years of operation.
"The COVID-19 lending schemes you have put in place benefit established firms and do not help companies of the future such as ours," read the letter, according to City AM.
Large companies such as Deliveroo and Citymapper, both yet to turn profitable, feature on the list, as do a number of forward-looking tech firms that work with advancing technologies such as cloud security and artificial intelligence.
"My concern is that unless something is done now, we might be undermining all that great work of recent years - where tech has been a real engine of growth," Bulb boss Hayden Wood told City A.M.
"Many of these companies have built great AI and tech and represent the future of our economy, but the Treasury's current schemes favour older companies. What we really want to see is a level playing field for these high-growth companies."
There are other government-backed initiatives that startups can look into, according to Tech London Advocates founder Russ Shaw. These include the R&D tax credit programme, which many tech businesses could theoretically qualify for.
"We're encouraging them to look at that as a way to secure cash and for the government to try and process those R&D tax credit applications more quickly," he told IT Pro. "So you're using an existing government programme, to expedite getting cash to startups that struggle to normally qualify."
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