InsurTech UK joins plea to protect British startups from being “wiped out” by the coronavirus

Several UK tech industry bodies are asking the government to do more to support the nation’s startups or risk having a generation of innovative ventures “wiped out.”

The eight industry bodies that have signed an open letter pleading to the government to protect UK startups include Innovate Finance, Tech Nation, UK Tech Cluster Group Chair, Tech London Advocates, TechUK, Global Tech Advocates, InsurTech UK, and the Coalition for a Digital Economy (Coadec).

“It’s a huge problem right now, no one will do new deals,” Dom Hallas, executive director of Coadec, told Sky News. “An entire cohort of startups will be wiped out.”

The tech lobby groups called for governmental support in several ways. Chief among these wants was for the government to consider the special needs of the tech scene in terms of the Coronavirus Business Interruption Loan Scheme (CBILS).

Chancellor of the exchequer Rishi Sunak set up the scheme in early March to provide loans of up to £5m to smaller businesses across the UK.

However, Tech Nation’s chief executive Gerard Grech noted that many startups risk being disqualified from the scheme as “it still does not appear to address a key issue we have been hearing from early stage, pre-profit tech businesses working on ground-breaking solutions, that lack the trading history for banks to consider them ‘viable’ propositions.”

He added, “Nearly all businesses we speak to would welcome a cash injection due to cashflow issues. While many tech scaleups are cutting costs and conserving cash, many are in the middle of raising more funding, which we’re already seeing signs of slowing down.”

InsurTech UK added that many of its member worried that, if they were not disqualified from the scheme, they would then have to commit to excessive personal guarantees from some of the lenders in order to access these loans.

”This goes against the spirit of the scheme in these unprecedented times,” InsurTech UK said in a statement. “An assessment of the viability criteria to be more accommodating to early-stage businesses, which is consistent across the various lenders would be incredibly helpful to those who are going to struggle to replace the lost funding opportunities in the months ahead.”

The tech lobby groups also asked that the government created a new fund within the British Business Bank which would specifically support startups ride out the storm.

InsurTech UK also noted that many InsurTech are uncertain about to what extent employers can keep in touch with furloughed workers to maintain their skill development, mental wellbeing and team cohesion.

InsurTech UK also wanted the government’s support in ensuring that insurers do not deem the partnerships and other commitments they have signed with InsurTech startups to be considered dispensable

The final point raised by InsurTech UK was that while the government is clearly already enduring a lot of strain, it could take some pressure of itself to use established support channels instead of creating new ones. “This  could  include  creating existing incentivess uch as increasing R&D tax credits, doubling SEIS/EIS limits or providing VAT rebates,” said InsurTech UK. “We would welcome a discussion about how this could work with government.”

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