The thriving UK tech sector is under threat as firms are missing out on a £330bn coronavirus support plan, Deliveroo, Citymapper and more have warned.
In a letter to chancellor Rishi Sunak, 12 of the UK’s most prominent tech chiefs today called for an urgent meeting with officials to find a way for tech firms to access financial aid during the pandemic.
The government has rolled out a £330bn support package for businesses as the health crisis plunges the country into an economic downturn.
But the tech sector has warned that fast-growth, loss-making firms are falling through the cracks as they are too large for small business support but do not have a credit rating required for the large business package.
“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, which was signed by tech titans including Deliveroo and Citymapper.
Artificial intelligence firm Benevolent AI, Cambridge-based cybersecurity giant Darktrace and challenger energy firm Bulb were also among the signatories.
“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.”
The tech chiefs called on the government to find a way for fast-growth UK tech sector firms to access support, either by relaxing terms for existing schemes or establishing new ones.
One potential solution could be to base eligibility on projections of future growth and profitability, rather than on current finances.
Darktrace chief executive Poppy Gustafsson warned the growth of UK tech firms could be set back “at least 12 months” if the sector cannot access funding.
The bosses said their companies were at the forefront of the country’s fight against the pandemic as their technology was being used to support the NHS, keep businesses running remotely and provide consumer services such as food delivery.
They added that the UK tech sector, which contributed £149bn to the economy in 2018, would be crucial in helping the country bounce back after the pandemic.
“The UK’s technology sector is globally recognised as punching above its weight,” Gustafsson told City A.M.
“It has the potential to lead us through this economic crisis by being an engine for growth and productivity — these are the businesses of the future.”
City A.M. yesterday revealed that only 2,000 loans had been made to small and medium-sized businesses through the government’s coronavirus support scheme.
This has since risen to 2,500, but remains a small proportion of the hundreds of thousands of enquiries companies have made about the scheme.
Sunak has already overhauled the scheme for small firms after business owners raised concerns about the stringent terms.
A Treasury spokesperson said: “The UK tech sector is a central pillar of the economy, and we recognise there are significant cash-flow challenges for high growth and early stage technology companies.
“We are working urgently in government and with the venture capital finance sector to assess these issues and consider how to best support them.”