Funding Resources for Startups (Virtual 2020)
UK Government funding
During the Covid19 Outbreak
- Innovate UK:
- £200m available for companies that already have grants with Innovate UK.
- £200m new grants for companies who have never had funding from Innovate before.
- £350m of innovation loans.
- Future Fund via British Business Bank:
- convertible loan notes.
- company must have raised £250k in equity in the last 5 years.
- 50% of the current round must be from a third investor so essentially the loan is on a matched basis.
- The govt needs to be comfortable DD has been done hence why there needs to be a lead investor.
- Loan amount provided to the company ranges from £125,000 to £5 million and will have a minimum of 8% per annum (non-compounding) interest charge applied.
EUROPEAN UNION/EUROPEAN COMMISSION
EU funding for start-ups and SMEs during the crisis
Working capital & investment loans [EUR 13.3bn guarantee contract signed – 25bn SME financing]
- One of the first measures introduced mid-March – EUR 1bn unlocked for existing instruments to result in EUR 8bn in working capital loans for small businesses
- Eligible companies: start-ups and SMEs fulfilling innovation criteria
- Loans up to EUR 7.5m
Equity investments [EUR 1bn investments made into 71 funds]
- To counter the deteriorating fundraising conditions because of COVID-19, we are amending our equity facility to provide additional financing to financial intermediaries, allowing them to close/ achieve viable fund size.
- EUR 100m for Recovery Equity Facility for Innovative Technology companies
- Early stage focus: pre-seed, seed and start-up phases. (Tech transfer, BAs, VC)
- Focus on Horizon 2020 objectives: life sciences, ICT, social impact, clean energy, AI/BT
European Innovation Council – Accelerator calls
The European Innovation Council (EIC) is the Commission’s flagship initiative for supporting game-changing innovations by combining an advanced science-and-tech research programme with an accelerator programme for start-ups and SMEs. The Accelerator Programme provides a unique support as it integrate the traditional grant support (up to EUR 2.5M) together with a dedicated fund for equity investment (up to EUR 15M).
European Innovation Council Accelerator for start-ups with game-changing innovations (up to EUR 2.5 million in grant and option of equity up to EUR 15 million)
- Ongoing open calls with 4 cut-off dates per year – latest 19 May, next 7 October
- For start-ups with business plan to roll out game-changing innovations & with ambition to scale
- Financing: up to EUR 2.5m in grants and EUR 15m in equity / per project
- Budget: EUR 3bn for 2018-2020 and EUR 10bn for 2021-2027
- Coaching and mentoring provided for selected start-ups
Alongside the EIC, the Commission offers Innovation Finance to start-ups, SME and mid-caps in 27 EU MS and 16 Associated Countries (https://ec.europa.eu/research/iscp/index.cfm?pg=associated).
The following two facilities targeting start-ups and SMEs are part of InnovFin – Innovation Finance instruments backed by Horizon 2020 (the EU Framework Programme for Research & Innovation):
- InnovFin SME Guarantee– working capital or investment loans for innovative SMEs and mid-caps of EUR 25.000 – 7.5 million provided by financial intermediaries across the EU and Associated Countries. https://www.eif.org/what_we_do/guarantees/single_eu_debt_instrument/innovfin-guarantee-facility/call/covid-cosme-innovfin-support-measures.pdf
- InnovFin Equity– investments and co-investments by European Investment Fund to or alongside funds focusing on companies in their pre-seed, seed, and start-up phases operating in innovative sectors covered by Horizon 2020. http://www.eif.europa.eu/what_we_do/equity/single_eu_equity_instrument/innovfin-equity/index.htm
EU funding after the crisis
Recovery package announced 27/05/20 for EUR 750bn – one pillar focuses on private investment:
- Solvency Support Instrument – mobilising private investment to companies in sectors, regions and countries most affected
- Budget: EUR 31bn implemented as of 2020
- Strengthened InvestEU – the main investment instrument at EU level as of 2021.
- Budgetary guarantee of EUR 72bn for implementing partners to address market failures and investment gaps in key policy areas – green and digital (but also health etc.).
Canadian Government Funding During the Covid19 Outbreak
- The Government of Canada is taking immediate action to help Canadians facing hardship as a result of the COVID-19 outbreak.
- $149 billion in total direct support to Canadian workers and businesses
- $25 billion Canada Emergency Business Account (CEBA): Up to $40,000 interest-free loans for small businesses (2019 payroll between $20,000 and $1.5 million). 25% forgiveness if paid by 2022
- Bank of Development of Canada Co-Lending Program: $12.5 million for the operational cash flow requirements through through the client’s primary financial institution
- BDC MATCHING INVESTMENT PROGRAM FOR CANADIAN VC-BACKED COMPANIES AFFECTED BY COVID-19: Eligible companies must be Canadian-based, venture-backed, and have raised at least $500K in external capital before applying
- Innovative Solutions Canada has dedicated funding to help combat current and future outbreaks of the novel coronavirus (COVID-19) and other similar threats. Our program will help support the Government of Canada’s fight against COVID-19 by funding R&D and testing prototypes in real-life settings that can help protect Canadians.
- Export Development Canada (EDC) is working with financial institutions to guarantee 80% of new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized enterprises (SMEs).
- The Regional Relief and Recovery Fund (RRRF) provides financial contributions (interest-free loans) to help support fixed operating costs of SMEs, where business revenues have been affected by the COVID-19 pandemic. The Fund, valued at more than $962 million nationally, is delivered by Canada’s six regional development agencies.
- To help businesses keep and return workers to their payroll through the challenges posed by the COVID-19 pandemic, this program would provide a 75 per cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.
- The Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
Other Canadian Resources
- $250 million (on top of other programs) through the Industrial Research Assistance Program (IRAP) to assist innovative, early-stage companies that are unable to access other COVID-19 business supports.
- $20.1 million in support for Futurpreneur Canada to continue supporting young entrepreneurs across Canada
Canadian Government Annual Grants exceeds $26B
- Innovative Superclusters Initiative
$950 million to support business-led innovation superclusters
- Strategic Innovation Fund
$2.2 billion and for large innovative projects
- Clean Growth Hub
$2.3 billion for green and clean technologies
- The Scientific Research and Experimental Development Tax Incentive Program
largest federal program that supports business R&D in Canada and provides $3 billion in tax incentives
US Funding During the Covid19 Outbreak:
U.S. Landscape Post-Covid:
– Venture Capital and Private Equity Funds are mostly in triage mode
– They know that the pandemic is going to slow down the sales of most of their portfolio that is selling into the enterprise market
– Industries are hit across the board with the exception of pockets of healthcare
Bio and HealthTech is seeing a surge of interest.
– COVID has had profound effect on the organizational aspects of the startup ecosystem
– Across the board we see salary cuts and layoffs in play
– There is a few smatterings of new funding.
– The companies that are getting new funding are early stage
– The valuation of these companies has not necessarily come down
U.S. assistance to startup companies post-COVID is being channeled primarily through the Small Business Administration (SBA). It includes:
- Paycheck Protection Program (PPP)
Gives 2.5 months of payroll as forgivable loans
Banks were given money by SBA to give to its clients
Done in 2 surges. First surge ran out of money and second surge started
2-year loans at 1% interest
Meant for mom n pop shops
There are limitations of what the funds could be used for
(primarily payroll, lease, utilities)
Limitation in size
One set of loans was for companies with less than 500
Second set of loans was for companies with than 500 employees
Size and Control set limitations to these loans
- Economic Injury Disaster Loans
Also governed by SBA
Loans are primarily for companies that have had inventory and hits on retail
The ones we have seen are $20-50k
Otherwise, there are a few other sources for funding in the US, among which the following:
National Science Foundation’s rapid response grants to support COVID19 research
Grant Station funding in the area of COVID19
Frontier Coronavirus Funding:
Grant Watch non profit COVID grants
What we do
iBRIDGES is an open, inclusive and collaborative initiative which aims to empower a worldwide high-tech entrepreneurial community, focused on those of Iranian descent, to exchange knowledge, best practices, and innovative thinking. The iBRIDGES community is committed to nurturing individuals who build and accelerate the growth of an “Innovation Economy” everywhere.
iBRIDGE brings all entrepreneurs of Iranian descent together to explore the role that a high-tech entrepreneurial ecosystem can play in economic development and diversification.
Our mission is to create a community of high-tech entrepreneurs of Iranian descent, energized to exchange knowledge, best practices, and innovative thinking.
We connect entrepreneurs and startup founders with experienced investors and successful entrepreneurs. iBRIDGES provides a dynamic platform for mentoring relationship.