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The Government are Eyeing Equity Stakes in Technology Start-ups

The Government are Eyeing Equity Stakes in Technology Start-ups

The government is considering making a convertible loan available to technology start-ups. This is going to be managed by the Business Growth Fund. The government are mulling over various schemes to try and help businesses survive the pandemic that is going on right now in the UK. The government has lauded the tech sector in the UK, and they have also done everything they can to try and support the economy as well. Boris Johnson has released a statement saying that the tech is the backbone of the UK and that more needs to be done to try and give start-ups the support that they need during this difficult time.

The Ideas

One of the many ideas that are being considered right now is that the government could offer loans to start-ups and that this could either be repaid after the crisis is over, or it could be converted into an equity stake. Venture capital would of course, have to match whatever the government decides to invest. This is according to the Financial Times. Of course, when you look at tech ventures you will soon see that casino sites and online bingo sites really are thriving. If the government was able to promise a degree of support for other ventures, then this would mean great things for the UK industry.

3I

Some believe that this would be very similar to the 3I movement. The government scheme was launched right after the Second World War and it was designed to try and regenerate the economy. The Business Growth Fund is state accelerated and it is being eyed up right now to try and manage the convertible loan scheme. Of course, it is also going to manage anything that comes after it as well. BGF was launched in the year 2011 and it was able to raise £2.5 billion from banks and this included those who were from Barclays, HSBC, Lloyds and even RBS as well. Another suggestion is that InnovateUK, who are a government agency, are going to manage the scheme as well. They are going to do this in the same way as the British Business Bank. The Sunday Telegraph have reported that the government are going to approach a City figure about leading some kind of bailout task force. This is going to inject funds into a struggling medium-sized high street business structure and in return, equity stakes are going to be given. Foresight Ventures have proposed yet another £5 billion private-sector fund and this is going to help businesses to emerge from the crisis. The Foresight Ventures proposal is going to be the new 3I and this is going to help businesses to recover in the best and fastest way possible. Of course, only time will tell if this is going to make a huge difference or not but right now it is a welcome idea as so many people are struggling to cope with the amount of hardship that is going on in the UK.

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