“Today’s budget was a strong signal from the government that it remains committed to supporting the UK’s SMEs. We see the announcement of additional funding for startup loans and the British Business Bank along with increased investment in R&D as a necessary and welcome stimulus for the startup ecosystem.
We welcome the commitment to infrastructure spending as, post Brexit, the UK needs to become the most attractive place in the world to live and build businesses: better transport, communications and housing will make a major contribution. The Enterprise Investment Scheme and other measures have transformed the UK’s start up and technology sectors, attracting talent and capital far above any other European country and we now need to consolidate and build on that firm foundation. The Government is showing that it understands that.”
“Today’s surprise announcement that the government will exceed its commitment to doubling investment in R&D by increasing spending to £22 billion, the creation of a central research centre modelled on ARPA, and funding explicitly for regional R&D, firmly establish the government’s ambition to maintain the UK’s position as a global leader in innovation, with scientific research at the forefront of industrial strategy.
However, investment in R&D is just one part of the puzzle. While the Chancellor announced £200 million in new funding for the British Business Bank to invest in scaleups, this additional early-stage funding will not close the funding gap for R&D-led businesses at growth stage — something that is sorely needed to help deep tech businesses spinning out of universities to achieve commercialisation, revenue, and scale over the long term. Only 10 per cent of all startup investment went to such companies in 2019, at the amount invested was down 10 per cent on the previous year despite growth in investment overall.
If we don’t bridge this gap, we run the risk of innovation from ’the UK’s ARPA’ withering on the vine and world-leading businesses and individuals lost from the UK as they sell up early or migrate to the US in search of the growth capital they need.”
Michael Niddam, Managing Director, Kamet Ventures said,
“The change to entrepreneurs relief is not going to negatively impact entrepreneurs. What is reassuring is the commitment to support R+D and support early stage businesses. Given the current global climate due to Covid-19 it is vital that we are able to defend our innovation capabilities. By reassuring entrepreneurs that support is there if they need it will go a long way in preventing any long term impacts to the startup ecosystem.”
Max Bautin, Managing Partner, IQ Capital
“It is extremely disappointing to see changes to Entrepreneurs Relief in the Budget – especially in the context of Brexit and claims of the ‘business friendly’ agenda. Entrepreneurs are at the heart of the UK economy, founding sustainable businesses that create jobs, pay taxes and generate growth in the local and national economy. High-tech business in particular create disproportionate economic outcomes for the economy and quickly generate returns for the HMRC as most of their expenses are salaries (taxed at up to 65 percent), VATable sales and indeed Capital Gains tax when such businesses are sold or listed. These entrepreneurs create this huge economic and social value at the personal expense of taking extraordinary risks with their lives, careers, families – often working crazy hours in blind dedication and without any safety nets or guarantees.
It is therefore shocking that the “pro-business” Government would ask them to pay tax many multiples higher than the EIS investors who fund them. There is no shortage of investor money but entrepreneurs, the true pillars of the economy, need to continue to be incentivised. This is particularly true for ‘digital’ economy, where there is a real risk of such businesses – which London and the UK’s ecosystem has been a magnet for – may simply move elsewhere. While it was promising to see a £22bn investment in “tech for the future”, we can not forget the individuals who take the risk of converting that tech into business. To constrict the already very limited tax benefits that they receive is to stab the UK economy in the back, at a time when Brexit and Covid-19 is already making the life of many UK small businesses and entrepreneurs very challenging indeed.”