The British Private Equity & Venture Capital Association has recommended the Government introduces a £500 million funding facility for venture capital-backed, early stage companies operating in the digital, biotech and life sciences sectors, to support them during the COVID-19 crisis.
Early stage businesses have been a key driver in establishing the UK as a global leader in the digital economy and other high technology sectors, and this position is now under severe threat.
The BVCA’s latest submission to the government follows extensive consultation with our members, and analysis of the issues facing these companies and engagement with officials in the development of a detailed proposal. This aims to secure a bridge to the post-COVID-19 recovery period for this key part of the UK economy, while ensuring taxpayers’ interests are incorporated appropriately
Without a solution, the COVID-19 crisis will starve these companies of the cash they require to turn into mature self-sustaining businesses and will lead to many promising companies failing. The specialist sources of capital they usually access are increasingly unavailable, and they also do not meet the criteria of regular commercial lenders. This puts at risk their intellectual property and patents, with the prospect of strategically important UK know-how being lost to international competitors. The BVCA argues that this urgent situation requires a straightforward solution and rapid implementation.
The BVCA is proposing a bridge funding facility in the form of a convertible loan, a standard investment instrument, of up to £5 million per company, with Government funding supplemented by existing investors. Including money from the private sector, this would provide at least £625 million of capital to early stage businesses. The BVCA argue that it should be deployed rapidly into the market by the British Business Bank.
Michael Moore, Director General, BVCA, said: “The scheme seeks to address a serious market failure in the UK’s globally-competitive digital and tech economy caused by the urgent and necessary steps taken to address the COVID-19 outbreak. It is designed to support the sector at an unprecedented time, balanced with the need to protect taxpayers’ interests. The private sector must and will contribute but cannot solve this problem without help from the UK government. “
Tom Allchorne, Director, Communications, BVCA
The British Private Equity & Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 800 member firms, including more than 500 fund managers and institutional investors.
FOR FURTHER INFORMATION PLEASE CONTACT THE BVCA
+44 (0)20 7492 0400
TOM ALLCHORNE, DIRECTOR