Over one billion invested in start-ups by government
Chancellor Rishi Sunak has announced plans to invest over one billion pounds to support start-ups who are not otherwise eligible for coronavirus schemes.
The money will match £250 million worth of private investment, and further the pre-existing £550 million for firms who work on R&D.
Sunak believes that the money is an investment in the UK’s future, and hopes it will allow the country to grow in the aftermath of the pandemic.
He said: "This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”
Due to the fact companies are inclined towards losing money in their earlier years, start-ups are ineligible for government schemes already in existence as they require proof of a profit. However, Sunak’s decision places faith in the UK’s research and development industry.
There are caveats for companies who hope to receive funding from the government. They must have raised a minimum of £250,000 privately in the last half a decade, and the government loan must be matched by private investors.
If the loan is not repaid, the government reserves the right to take part ownership of the company in question.
While the move has been widely welcomed by entrepreneurs, however, Labour warn that the scheme seems too good to be true.
Anneliese Dodds, the shadow chancellor, said that: “the devil will be in the detail of how firms can qualify for this funding and how long it will take to arrive.”