Britain is blessed with one of the healthiest technology industries in the world.
We are creating more tech unicorns – companies valued at over $1bn – than anywhere else in Europe. Globally, we are only behind giants America and China. Over the past decade, Britain created a veritable paddock of 63 unicorns.
Our tech scene is responsible for eight per cent of our GDP and 10 per cent of our workforce.
These companies, of course, didn’t start out as the economic superpowers they now are.
They spent millions innovating and disrupting, often not turning a profit for many years. If it weren’t for the investors who took a chance on the likes of Deliveroo and Revolut, our economy and society would not be where they are today.
But the pandemic, described by Silicon Valley investors Sequoia Capital as a “black swan” event, risks condemning similar innovators to an early end.
Understandably, the economic shock that threatens to dwarf the 2008 crisis is seeing investors withhold their chequebooks.
The government’s new coronavirus business interruption loan scheme (CBILS) is a great help for accomplished, incumbent companies.
But there is no equivalent help for innovative young startups, the future unicorns. To qualify for a CBILS loan, the business must have already been eligible for a standard loan before the crisis.
Most young companies are valued based on future growth and therefore won’t be eligible for CBILS.
Prior to the crisis, venture capital and angel investors would back these companies, but EU rules restrict our ability to increase funding capacity from angels.
The Treasury must find a way to encourage angels and offer VCs a parallel scheme to CBILS, enabling investors to offer soft debt alongside equity to new investments.
This may save millions invested in R&D by these companies. For immediate results, we must also double R&D tax credits and reduce the approval time.
Many companies we risk losing include those who both now and in the future have a vital role to play in mitigating crises. Startups are contributing to everything from finding new treatments for the disease to building disinfectant robots for hospitals.
At Century, we’ve spent the last three months helping schools and families affected by school closures to continue to learn for free.
But without support for startups and scaleups, often pre-profit and in some cases, pre-revenue, Britain risks losing its stellar tech reputation, and the jobs and innovations that go with it.
Where we are hesitating, others are acting. This week, the French government announced a €4bn euro liquidity support package for start-ups and is meeting with VCs to encourage their support.
Our Prime Minister and chancellor have rightfully been applauded for their bold efforts to help established businesses and workers to weather the coming storm.
Prior to this crisis, the government repeatedly called on entrepreneurs to start companies, to innovate and create jobs. We answered those calls.
Now, the startup and scaleup community needs your support. Britain punches well above its weight in innovation, thanks to the hard work of entrepreneurs and a business-friendly climate.
Let’s not risk losing one of Britain’s biggest assets.
Priya Lakhani OBE is founder CEO of Century Tech and sits on the government’s AI council