Government delays mean startup funding takes three times as long
British startups are being forced to wait three times longer to access funding from a government programme than what was promised two years ago, a not-for-profit organisation has warned.
The Enterprise Investment Scheme Association (EISA), which helps funnel early-stage capital to small UK companies by linking them directly with investors, said it has recorded a growing delay in the time taken for the government to approve businesses which qualify for the scheme.
Startups can currently claim up to £5m a year or £12m of funding in total through the Government’s enterprise investment scheme (EIS) within seven years of their first commercial sale.
Investors receive tax breaks if they invest in the early-stage companies which are selected to participate. However, small businesses are now waiting an average of 56 working days for their funding to be processed, rather than the 15 pledged by the Government in 2017, according to Mark Brownridge, director general of the EISA
“It’s a big issue, I don’t think the government sees that,” he said.
The government pledge to “streamline” the applications for funding was part of a move to finance growth in innovative firms, especially in the technology sector.
The plans also expanded the amount and type of companies that were eligible to receive funding through the Enterprise Investment Scheme (EIS) and Venture Capital Trusts.
A HM Treasury Spokesman said: “We do not recognise these figures. The truth is that over 85 per cent of applications receive responses within 15 working days.
“The UK is creating more start-ups and attracting more venture capital funding than any other European country – just last week we injected a further £200 million into the British Business Bank to help ensure small businesses and entrepreneurs can thrive.”
Biotech companies, which are a main focus of the government’s new push, were already hit by a change in EU state aid rules implemented last year.
These new rules, which Telegraph sources said were implemented by Innovate UK, bar companies whose accumulated losses equal more than half of their share capital.