The British government is set to say it will escalate the funding it provides to startups to allow them to flourish once the UK leaves the European Union.

In a speech today, the UK chancellor Philip Hammond is expected to reaffirm support to UK-based startups that would usually apply for funding from the European Investment Fund (EIF). Once the UK finalises its withdrawal from the union in March 2019, it is unlikely that British businesses will have access to support from the funds.

The EIF was set up to support small and medium-sized enterprises (SMES) across Europe through funds provided from the likes of the European Investment Bank (EIB) as well as other public and private banks and financial institutions.

Between 2011 and 2015, the EIF committed $2.5bn to around 144 UK-based venture capital (VC) firms – around 37 percent of all venture funding raised in the UK during those five years, according to Invest Europe. Bloomberg reported that well-known venture firms in London, such as Atomico and Seed Camp, have the EIF as a limited partner in at least one of their funds.

Earlier this year, the fund announced that it supported the early-stage VC firm Frontline Ventures close it’s Fund II with $67m. Frontline, which has offices in Dublin and London has invested in startups across Ireland and the UK.

This is one of the reasons that startups and the UK tech industry in general, have raised concerns about Brexit over what could happen when access to this fund is lost when the UK leaves the EU.

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By GlobalData

Hammond is set to tell London’s financial sector that the UK government is holding talks with the EIB and is committed to providing assurances to ensure continued access to funding. A UK Guarantee scheme will be implemented to offer new types of support for major projects, such as construction also.

According to a statement released ahead of the speech, the chancellor will say:

Investors need certainty in order to continue to support the UK economy and create jobs as we leave the EU. That is why we will fortify the vital financial support that helps businesses to grow – from cutting-edge start-ups right through to large-scale infrastructure projects.

A study released today by recruitment website Indeed said that one in new UK jobs are in technology, with jobs in artificial intelligence (AI) and data science coming top of the list.

Raj Mukherjee, senior vice president at Indeed, said:

The software economy is driving significant new employment opportunities in London, and this is showing up in the tech talent shortage, especially where developer and more senior roles are concerned.

The study demonstrates how important the tech and startup industries are to the UK. As well, the digital economy contributes around $123bn to the UK annually, up 30 percent in the last five years.  This points to the pressing need to ensure that new companies will be able to receive funding once the Brexit process happens.