UK startups call for emergency support in order to survive the coronavirus crisis.

The U.K. government is looking for a way to support its startup industry by exploring a range of different options. They are considering a possible co-investment model involving state-owned funds (via the British Business Bank); as well as, private venture capital (VC) funds. 

One of the options considered by the ministers is convertible loans which could either be repaid in a later stage or they can be transformed into equity stakes owned by the state. However, this would require a matched co-investment with VCs which ensures only existing venture-backed startups will be eligible.

According to the Financial Times (subscription required), ministers are considering the above option on a case-to-case basis and only after companies have sought out fresh capital from private investors. Another option that’s been considered is additional grant funding via InnovateUK which is a government body providing support to innovative businesses – and an expansion of R&D tax credits.

Furthermore, under recently-appointed Finance Minister Rishi Sunak, the government has launched a £330 billion ($409 billion) loan scheme and other relief measures to help firms avoid collapsing. Additionally, France recently introduced a 4 billion euro ($4.4 billion) liquidity package to support its start-ups’ cash flows. 

Some worry the U.K. could be at risk of falling behind. Many startups are stating they can’t access this funding because they are not yet profitable.

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