It is great the government finally got around supporting the future of its economy, infrastructure, and technological capabilities with its Future Fund. However, looking at the small print of the scheme, I think the policy lacks strategic vision.
Right now, the Future Fund is designed to support companies that have already raised over £250K and not looking to raise EIS investment. While it makes sense for the government to seek to de-risk its investment, such criteria cut out the very early-stage companies.
But this crisis is not going away, nor do the problems those early-stage companies are seeking to resolve. Be in the sustainability transition, infrastructures, transportation, artificial intelligence, or knowledge management, hundreds of entrepreneurs are bootstrapping their businesses.
They, alone, bear the cost of the crisis, and push the development of tomorrow’s solutions.
Early-stage start-ups are inherently riskier, but every company that is today critical in dealing with this crisis started as a risky early bet.
While the government doesn’t necessarily have the expertise to assess the potential of a particular technology or business opportunity, there are objective metrics it can use to assess the potential of very early-stage start-ups.
First, the government has long identified strategic areas for technological development. While developed in times of “sustained economic growth” those priorities are even more critical now.
The second metric the government can use to assess the level of support it should provide is the financial commitment made by the founders. Entrepreneurs not only put countless hours, sweat, and tears in their venture, they are often the first to invest in their idea.
If the government extends the Future Fund mechanism of matching investment to the investment made by the founders themselves, it will go a long way in helping those businesses keep going while the world adjusts to a new normal.
The financial burden of such a measure on the Treasury would be comparatively minimal since most entrepreneurs can only invest a few thousand pounds in their venture. But for many early-stage start-ups this will be the difference between life or death.
The start-up ecosystem is down but not out. Creativity and problem solving thrive in times of crisis, and entrepreneurs all over the country will rise to the challenge.