The UK's unicorn founders issued a dire warning that COVID-19 will crush promising tech startups without financial help
- Founders of some of the UK's biggest unicorn startups have warned that scale-up firms could be crushed without more financial support from the government during the COVID-19 pandemic.
- Deliveroo, Darktrace, and Graphcore are all valued above $1 billion and among the 12 startups that cosigned a letter demanding access to support from the UK government.
- The UK government launched a dedicated loan scheme for businesses disrupted by the virus, but startups mostly don't qualify because they aren't profitable.
- Signatories warned the government the UK tech sector had been left "at risk" due to the lack of financial support available.
- Click here for more BI Prime stories.
The founders of some of the UK's buzziest unicorn startups have called on the government to provide financial assistance to high-growth companies to deal with the consequences of the coronavirus pandemic.
Twelve founders and CEOs on Wednesday cosigned a letter to chancellor Rishi Sunak, demanding better access to financial support for scale-up firms during the pandemic.
Five the 12 signatories are unicorn startups valued above $1 billion, including security firm Darktrace, AI chip company Graphcore, food-delivery firm Deliveroo, doctor app Babylon, and simulation software firm Improbable.
"As founders and CEOs of leading companies, we are concerned that unless urgent changes are made to the current scheme, then the high-growth UK tech sector will be put at risk," they warned in the letter.
Boris Johnson's government has taken unprecedented steps to protect British businesses in recent weeks, including subsidizing 80% of workers' wages and delaying tax payments until June.
But most loss-making startups don't qualify for the government's newly introduced "coronavirus business interruption loan scheme", as they are unlikely to be deemed "viable" by banks.
Sunak was accused of leading startups "to the slaughterhouse" by some after investments made through the UK government's founder-friendly investment scheme tanked by 70%.
"The COVID-19 lending schemes you have put in place benefit established firms and do not help companies of the future such as ours," Wednesday's letter continued.
Several of the sigantories are helping the government in its efforts against COVID-19.
Ali Parsa, CEO of healthtech startup Babylon recently met with the UK government to discuss how best to scale up coronavirus testing in the UK.
Deliveroo CEO Will Shu is in talks with the government about delivering care packages to the vulnerable.
Faculty CEO Marc Warner is another signatory. His firm is helping the UK's healthcare system develop tech to monitor the COVID-19 outbreak.
The letter continued: "We are stepping up to help the country at this difficult time by helping tens of thousands of small businesses to continue operating, helping vulnerable customers get essential services and using innovative technology to give the NHS better tools to tackle the pandemic...
"We are therefore writing to ask you to urgently set up a taskforce meeting of leading tech businesses to work with you and your officials to find a way for high-growth tech companies to be able to access the lending schemes you have already established or new schemes if necessary."
It would be a 'disaster' for COVID-19 to kill off fledgling global businesses
Speaking to Business Insider, Poppy Gustafsson, CEO of cybersecurity firm Darktrace, said it would be a "disaster" for British tech startups to go out of business due to the pandemic.
"As a global business, we started preparing for this eventuality early, and have a good business continuity plan," she said.
"It would be a disaster if we lose some of the groundbreaking innovative technologies that can develop into global businesses just because this crisis has hit them at the wrong time in their growth cycle."
AI chip startup Graphcore told Business Insider said the firm wanted "to signal our support... for the next Graphcore".
They added: "We're fortunate that our business is growing despite the COVID-19 crisis...[but] many of these companies might not be in such a secure position."
Meanwhile, a spokesperson for gaming startup Improbable said the UK's tech sector faced "different challenges" compared to established businesses.
"We believe the government has acted quickly and taken significant steps to support British businesses.
"However, because many leading tech companies are focused on growth, product and service innovation, they do not meet the requirements to qualify for the flagship support scheme currently in place."
Business Insider approached Babylon Health, BenevolentAI, Blockchain, Bulb, Citymapper, Faculty and Five AI for comment.
A spokesman for the UK Treasury said: "The tech sector is a central pillar of the UK economy, and we recognize there are significant cash-flow challenges for high growth and early stage technology companies.
"We are working urgently in government and within the venture capital finance sector to assess these issues and consider how to best support them."
Deliveroo and GoCardless declined to comment.
Do you have a personal experience with the coronavirus you'd like to share? Or a tip on how your town or community is handling the pandemic? Please email covidtips@businessinsider.com and tell us your story.And get the latest coronavirus analysis and research from Business Insider Intelligence on how COVID-19 is impacting businesses.