Power of the Pack

There is power in the collective impact of women banding together to support one another. For many of our Female Founders, the pandemic has presented unprecedented challenges, making strong female networks more important then ever. In our Mentoring Matters report we talked about how mentoring increased not only knowledge and skills, but importantly self-confidence. 

Our Female Founders have channelled the power of collaboration and raised each other up. We are seeing digital events being offered which go beyond technical content and focus on mentorship, well-being and stress management. 

In this week’s newsletter, we cover the important policy updates you should know about, including the UK Government's recently revealed COVID-19 recovery plan. We also provide some updates on the opportunities available to our Female Founders. We finish with a wrap up of news highlights from this week.
 

UK GOVERNMENT SUPPORT
 

This week, we cover policy updates related to the Government Support schemes on offer and the Government’s COVID-19 recovery strategy.  We would encourage you to check out the UK Government’s Coronavirus Business Support Hub for more information. Keep an eye out for our business resilience checklists, which we will be releasing in the coming weeks, for tailored support. 

1. COVID-19 Recovery Strategy

This week, the UK Government released its COVID-19 recovery strategy, setting out an indicative roadmap to “return life to as close to normal as possible, for as many people as possible, as fast and fairly as possible... in a way that avoids a new epidemic, minimises lives lost and maximises health, economic and social outcomes.”
 
The precise timetable for these adjustments will depend on the infection risk at each point, and the effectiveness of the Government’s mitigation measures like contact tracing. If you are interested in reading more about the three phases for reopening, check out our recent policy update.  

2. Top-Up Grant Funds Scheme

The UK Government has responded to concerns from SMEs who were not able to access the Small Business Grants Fund (SBGF) and the Retail, Hospitality and Leisure Grants Fund (RHLGF). The additional fund of £617 million is aimed at SMEs with ongoing fixed property-related costs. We covered this in our recent policy update.

Allocation of funding will be at the discretion of local authorities who have been asked to prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief and B&Bs that pay council tax, rather than business rates. 

There will be three levels of grant payments:

1. £25,000 will be the maximum.
2. £10,000 grants will also be available.
3. Local authorities will have discretion to make payments of any amount under £10,000. (It will be for councils to adapt this approach to local circumstances.) 

You can check out more about the Top-Up Grants here and find your local authority here. 

3. Support for our Start-ups

In our previous newsletter, we covered the UK Government’s Future Fund, set up to support start-ups through coronavirus. The Future Fund will issue convertible loans of between £125,000 and £5 million to startups seeking bridge funding for working capital purposes. 

Our Member, Emma Sinclar, has written an open letter to Rishi Sunak, Chancellor of the Exchequer, calling on the HM Treasury to align the Future Fund with the Diversity Agenda. As Emma highlights in her petition, with only 1% of VC funding going to Female Founders in 2019, they are less likely to have raised the £250k required to receive support. The open letter urges the Chancellor to set an “aspirational target” for backing diverse founders, to ensure that the Future Fund does not set back the Diversity Agenda. 

4. Job Retention Scheme 

The UK Government has extended the Job Retention Scheme for 4 months, until October. There will be no changes to the scheme until the end of July, whereby the government will pay 80% of furloughed workers’ wages up to £2,500 per month. From August, the scheme will continue for all sectors and regions, but with greater flexibility to enable companies to bring furloughed staff back on a part-time basis. Employers will need to share with HMT the cost of paying employees' salaries. 

5. Bounce Back Loans

The Bounce Back Loan scheme for small businesses launched last week. The Government is guaranteeing 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. You can borrow between £2,000 to £50,000. Barclays has launched their Bounce Back Loan Scheme, for more details click here.

BARCLAYS SUPPORT AND OPPORTUNITIES
 

1. Female Founders Forum - 2020 Events

In our previous newsletter, we announced the regional roundtable Eagle Lab events which will be kicking off in September. The events will be run either digitally or physically, depending on the lockdown guidance. We received a great response from Female Founders in Manchester, Birmingham, Cardiff, Edinburgh, Southampton, Leeds and Newcastle.

If you know of any female leaders in these regions, we would like to hear from you/them. Please get in touch or pass on my details jess@tenentrepreneurs.org.

2. Barclays Coronavirus Support Hub 

The Barclays coronavirus support hub provides the latest information, tools and guidance to support businesses throughout the COVID-19 pandemic. This hub includes information about Barclays products, webinars, Facebook live events and more information on how to access the government schemes. 

You can also download Barclays’ coronavirus checklist to support your business resilience planning throughout this period. There is also an updated FAQs section on this hub , which provides the latest information for businesses. 

3. Barclays Eagle Lab headline RE-Defined

Barclays Eagle Labs are this year’s headline sponsors of RE-Defined. A virtual conference celebrating the successes and resilience of female founders and underrepresented women in business across the UK.

Taking place on Friday 29th May the conference will include practical workshops, curated talks and a panel session featuring inspirational female founders and leading women in business. This is a ticket-only event – to secure your place click here.

FEMALE FOUNDER HIGHLIGHTS

Here is a quick wrap up of some of the news highlights, featuring our Female Founders. 

• Our FFF Member, Tugce Bulut, founder of Streetbees, spoke to The Times this week, about how quickly her staff adapted to home working, explaining that she is now considering permanent changes: “I don’t think we’ll ever resume full-time office work,” she said. “It’s important for the culture we don’t give it up entirely, but things will change forever.

• In an open letter to AWS’s CEO, our member, Emma Sinclair, called on the company to give oxygen to start-ups and scale-ups right now, by extending additional credits. Emma believes that Amazon is in a position to make a dramatic impact on the Global tech community. By giving out free credits, Emma believes, this will give struggling small businesses more runway. If you are interested in reading the letter, you can see it here.

• In an effort to support the struggling hospitality sector, our new Regional Member, Julie Grieve, has announced free use of Criton’s hotel guest engagement platform until 2021. Julie said to Insider: "it’s been very hard watching the impact of COVID-19 on the hospitality sector and all of the fantastic people who work in it”. 

• Our Member, Julia Elliott Brown, has been running a series of online Masterclasses, including a free Masterclass on Raising Investment in Challenging Times. These Masterclasses are aimed at supporting small businesses through through coronavirus. Julia has also been offering personalised support to female entrepreneurs with Enter the Arena’s Fundraising Academy.

• In order to help business owners manage their money more effectively, Felicia Meyerowitz Singh, founder of Akoni is providing its cash marketplace and tools for free to SMEs. You can register here for free for access to market-leading interest rate accounts, cash planning tools and tips.

We want to inspire female entrepreneurs across the UK. Do you know any inspiring female entrepreneurs? 

Connect them to me at jess@tenentrepeneurs.org and sign up to our Newsletter, which we send out every two weeks.

If you share content with the hashtag #femalefoundersforum, we will retweet you or repost it.

Policy Update: COVID-19 Recovery Strategy

Today the Government has released its COVID-19 recovery strategy. The plan is to “return life to as close to normal as possible, for as many people as possible, as fast and fairly as possible... in a way that avoids a new epidemic, minimises lives losts and maximises health, economic and social outcomes.”

Over the coming months, the Government will introduce a range of adjustments to current social distancing controls, aiming to time these according to both the current spread of the virus and the Government’s ability to ensure safety. This will happen in steps.

The government has set out an indicative roadmap, but the precise timetable for these adjustments will depend on the infection risk at each point, and the effectiveness of the Government’s mitigation measures like contact tracing.

Restrictions may be adjusted by the devolved administrations at a different pace in Scotland, Wales and Northern Ireland because the level of infection – and therefore the risk – will differ. Similarly in England, the Government may adjust restrictions in some regions before others: a greater risk in Cornwall should not lead to disproportionate restrictions in Newcastle if the risk is lower.

The text below are the most broadly relevant parts of the 60-page plan. The Government is due to share further details this week.

Step One – 13 May (Page 25)

"The changes to policy in this step will apply from Wednesday 13 May in England. As the rate of infection may be different in different parts of the UK, this guidance should be considered alongside local public health and safety requirements for Scotland, Wales and Northern Ireland.

"For the foreseeable future, workers should continue to work from home rather than their normal physical workplace, wherever possible. This will help minimise the number of social contacts across the country and therefore keep transmissions as low as possible. All those who work are contributing taxes that help pay for the healthcare provision on which the UK relies. People who are able to work at home make it possible for people who have to attend workplaces in person to do so while minimising the risk of overcrowding on transport and in public places. 

"All workers who cannot work from home should travel to work if their workplace is open. Sectors of the economy that are allowed to be open should be open, for example this includes food production, construction, manufacturing, logistics, distribution and scientific research in laboratories. The only exceptions to this are those workplaces such as hospitality and nonessential retail which during this first step the Government is requiring to remain closed.

"As soon as practicable, workplaces should follow the new “COVID-19 Secure” guidelines"... "which will be published this week. These will ensure the risk of infection is as low as possible, while allowing as many people as possible to resume their livelihoods.”

Step Two – 1 June (Page 30)

"Opening non-essential retail when and where it is safe to do so, and subject to those retailers being able to follow the new COVID-19 Secure guidelines. The intention is for this to happen in phases from 1 June; the Government will issue further guidance shortly on the approach that will be taken to phasing, including which businesses will be covered in each phase and the timeframes involved. All other sectors that are currently closed, including hospitality and personal care, are not able to re-open at this point because the risk of transmission in these environments is higher. The opening of such sectors is likely to take place in phases during step three, as set out below."

Step Three – 4 July (Page 31)

"The next step will also take place when the assessment of risk warrants further adjustments to the remaining measures. The Government's current planning assumption is that this step will be no earlier than 4 July, subject to the five tests justifying some or all of the measures below, and further detailed scientific advice, provided closer to the time, on how far we can go. 

"The ambition at this step is to open at least some of the remaining businesses and premises that have been required to close, including personal care (such as hairdressers and beauty salons) hospitality (such as food service providers, pubs and accommodation), public places (such as places of worship) and leisure facilities (like cinemas). They should also meet the COVID-19 Secure guidelines. Some venues which are, by design, crowded and where it may prove difficult to enact distancing may still not be able to re-open safely at this point, or may be able to open safely only in part. Nevertheless the Government will wish to open as many businesses and public places as the data and information at the time allows. 

"In order to facilitate the fastest possible re-opening of these types of higher-risk businesses and public places, the Government will carefully phase and pilot re-openings to test their ability to adopt the new COVID-19 Secure guidelines. The Government will also monitor carefully the effects of reopening other similar establishments elsewhere in the world, as this happens. The Government will establish a series of taskforces to work closely with stakeholders in these sectors to develop ways in which they can make these businesses and public places COVID-19 Secure."

COVID-19 Secure Guidelines (Page 25)

“Many measures require the development of new safety guidelines that set out how each type of physical space can be adapted to operate safely. The Government has been consulting relevant sectors, industry bodies, local authorities, trades unions, the Health and Safety Executive and Public Health England on their development and will release them this week. 

"They will also include measures that were unlikely to be effective when the virus was so widespread that full stay-at-home measures were required, but that may now have some effect as the public increase the number of social contacts – including, for example, advising the use of face coverings in enclosed public areas such as on public transport and introducing stricter restrictions on international travellers. 

"Many businesses across the UK have already been highly innovative in developing new, durable ways of doing business, such as moving online or adapting to a delivery model. Many of these changes, like increased home working, have significant benefits, for example, reducing the carbon footprint associated with commuting. The Government will need to continue to ask all employers and operators of communal spaces to be innovative in developing novel approaches; UK Research and Innovation (UKRI) will welcome grant applications for proposals to develop new technologies and approaches that help the UK mitigate the impact of this virus.”

Sign up for further Policy Updates here.

Innovation when the market cools

Until recently, venture capital was booming in the UK. In 2011, VCs invested £1.6bn in startups and scale-ups. By 2019, the value grew almost tenfold to £12bn. Over the same time period, the number of equity deals made trebled.  Yet, COVID-19 has brought the good times to an end. Equity investment fell sharply in Q1 and Q2 is expected to be even worse. It raises the question, what happens to innovation and entrepreneurship when the market cools.

The conventional wisdom about ‘hot markets’ is that they draw in dumb money and investor discipline falls. As a result, startups that have almost no chance of succeeding end up getting funded. On this view, we’re more likely to get a Juicero when money is easy. When times get tough, VCs will still invest in the startups they believe in, but will pull funding from the startups least likely to succeed.  

This is the glass half-full take. If true, then we should be somewhat relaxed about a collapse in VC funding. The startups with the best prospects should still get funded. Someone on this side of the debate might note that over half of the companies on the Fortune 500 were founded during a recession. 

But I’m sceptical. A key feature of VC investing is that VCs don’t know which startups will succeed and which will fail. A US study found that 60% of VC investments return less than their cost to the VC and the vast majority of VC returns are generated by just 10% of investments. If VCs could easily spot which were which, then they wouldn’t invest in the 60% in the first place. They might, however, change their risk profile and go for safer bets when the market cools, accepting they might miss out on the next Facebook. 

A study by two Harvard economists, Ramana Nanda and Mathew Rhodes-Kropf, puts the conventional wisdom around ‘hot markets’ to the test. Are startups funded in booms more likely to flop?  

The answer is yes, but the ones that do succeed IPO at higher values, patent more, and patent better (i.e. their patents are cited more by other businesses). The study, which controls for the fact that boom markets might be driven by better investment opportunities, finds that when a market is hot, VCs take a riskier approach 

The result isn’t driven by ‘dumb money’ entering the market either. When they control for individual investors, they find they still adopt a riskier portfolio. 

So why are risky innovative businesses more likely to get funded during a boom? Nanda and Rhodes-Kropf are strong believers in the value of experimentation. Hot markets enable more experimentation because they reduce the risk that a start-up won’t be able to find further funding in the future.

As a result, VCs don’t have to make large up-front investments and can instead make smaller but more frequent bets. It is the investing equivalent of the Silicon Valley slogan: ‘strong ideas, weakly held’. 

In this downmarket, many viable firms will still be funded. But we might see fewer riskier bets – fewer experiments. Innovative startups working with risky, untested technologies will find it much harder. Many will fail, even more than usual. 

This should worry us as innovators rarely capture the full value of their innovations. Entrepreneurs are often standing on the shoulders of giants, building on past innovations.  It shows why interventions such as the Future Fund are needed. Otherwise innovation risks being another victim of COVID-19.

After Furlough

In many ways, the initial economic response to coronavirus was the easiest bit. Throw a lot of money at the problem and try to save as many businesses as possible. This job is far from over, but the next step will be harder: getting areas of the economy (when it’s safe to do so) back up and running.

In its initial reaction, some governments have responded better than others. For the UK, one policy that has worked remarkably well has been the Job Retention Scheme. While in America, the unemployment rate has passed 20%, the opportunity to furlough staff has kept the UK rate at around 4%, for now at least. The Bank of England expects this to double to around 9% in the second quarter, but a lot will depend on how the government unwinds the scheme.

The option to furlough was exactly the right policy to deal with the extreme uncertainty. Without it “perfectly viable firms would have had to sack perfectly competent workers doing perfectly good jobs.” However, with a third of the potential workforce now not working and receiving government financial support, this scheme simply isn’t – and was never meant to be – sustainable. Some of these jobs won’t be viable without government support making the unwinding of the scheme both necessary and painful.

The government is expected to phase the scheme out by sector, depending upon how restrictions are impacting businesses. One challenge will be delineating sectors – for example, what happens to a PR firm that only works with clients in the hospitality sector? Or a manufacturing firm that supplies products to large conferences or festivals? Drawing the boundaries between those that are supported and those that aren’t is an unenviable task.

The government is looking at more flexibility in the transition (as many entrepreneurs have asked for). The economist Jonathan Portes suggests that when the scheme is ended in some sectors, individuals and firms could be offered a choice – either a lump-sum grant to the worker, or ongoing (but time-limited) financial support for short-time working. Portes also suggests wage subsidies for new hires – either of formerly furloughed workers or the unemployed to promote job creation in growing sectors.

There are no easy answers, but let me know your thoughts on how so we can represent your views in conversations we are having with government.

Future Fund Tweaks
As reported in Sifted, the details of the Future Fund are still being thrashed out. The Future Fund will be an invaluable lifeline for entrepreneurs whose businesses aren't suitable for the loan schemes, but we would like a few tweaks to ensure more entrepreneurs are able to benefit from it.

To open it up to more entrepreneurs, the amount a business owner needs to have previously raised should be reduced from £250,000 to £100,000 and investments through the Enterprise Investment Scheme should qualify so angel investors are incentivised to use it. In addition, the length of investment should be increased from three years to five years for funds that want to access the scheme through Venture Capital Trusts. Watch this space.

Procure Meant 
Tussell has released insightful data on the impact of coronavirus on public procurement. There has been a dramatic drop in public sector opportunities, with fewer than 900 invitations to tender published, down 66% in April compared to February. That said, the public sector has published 141 contracts worth £433m directly relating to its Covid-19 response, and this only scratches the surface as the government is reaching out directly to suppliers given the need for speed.

As the report recommends: “While public procurement is usually guided by competition regulations, in emergency situations such as this the public sector are able to directly award contracts relevant to their response to the crisis. If you think you can help the response to Covid-19, consider reaching out directly to public bodies to offer your services.” Find out more here.

Hive Mind
I’ve been invited to create a short top tips video on how entrepreneurs are dealing with coronavirus for the NatWest Business Hub. Who better to ask than a network of thousands of entrepreneurs? If you have any tips you would like to share with other businesses, let me know and I’ll quote you and your business for the video.

Read the whole thing here, sign up here.

Bouncing Back

The big news this week was the announcement of bounce back loans – the new 100% government backed loan scheme for small businesses. 

Businesses will be able to borrow between £2,000 and £50,000, with loans interest free for the first 12 months. The Government has also ordered banks to agree upon an industry-wide interest rate of less than 3% (the rumour is 2.5%). The scheme will launch for applications on Monday.

Loans shouldn’t be the only offer on the table. And they aren’t for businesses operating out of premises that have a rateable value up to a maximum of £15,000 who get £10,000 grants, and companies in the retail, leisure and hospitality sectors with a rateable value of between £15,000 and £51,000 who get £25,000 grants. (You can check whether you're entitled to a grant here.) However, as the FT reports (paywall), there are more than 10,000 small businesses in England that are missing out because they are based in shared offices.

The problem arises because the Government is forced to rely on existing systems to target support. In the short term the Government needs to find better workarounds to deliver fairly to everyone (something we will continue to work upon), but in the medium term we need reforms so we are better prepared.

I've written for Forbes on why Estonia's digital state was better prepared than many countries for dealing with the impact of coronavirus. The article explains why we have something to learn from them on digital healthcare, welfare, cabinet, voting, education, justice, and much more. The Estonian system isn’t perfect. For example, it lags behind the UK on innovations like Open Data. But decades of reforms have made Estonia less fragile than many to the pandemic.

Calling all Female Founders
We’re gearing up for a flurry of activity with our Female Founders Forum project that we run with Barclays.

As my colleague Jess Etherington explains in our latest Female Founders Forum newsletter: “We are launching regional roundtable Eagle Lab events across the UK. It is an ambitious, far-reaching programme that will bring our tried and tested formula of events from London to Manchester, Birmingham, Cardiff, Edinburgh, Southampton, Leeds and Newcastle.”
 
We will address four “scale-up” topics, with each roundtable focusing on a particular theme and provide you with more details about the events in our upcoming newsletters. The first event is due to kick off in September and will either be a physical or digital event, depending on local conditions and the lockdown.

If you want to get involved, get in touch with Jess, and please forward this email on to anyone you think might be interested. Sign up to the Female Founders Forum newsletter to be kept up-to-speed with all the work.

Good Hospitality
A row has been brewing between companies and insurers on what is covered under insurance policies. The FCA is asking the courts to get involved (paywall). Separately, the Hospitality Insurance Group Action (HIGA) has just been launched. Hospitality sector policyholders can register their details on the HIGA website if they would like Mishcon de Reya to conduct a review of their business interruption policies. The review will be free of charge. The firm will then ascertain which policyholders have coverage in principle to assess the viability of a group action against insurers.

Read the whole newsletter here, and sign up to the Newsletter here.

Supporting Our Female Founders

The UK’s female leaders have been tenacious in their response to the coronavirus (COVID-19) pandemic. While physical doors may be closed for the foreseeable future, digital opportunities are opening up. 
 
In this uncharted territory, networks of female mentors have become more important than ever. As we highlighted in our Mentoring Matters report, mentoring is one of the best ways women can help other women, especially through a crisis. Virtual events have become a means to connect female founders and a source of advice and support. Instant messaging tools like Slack and Whatsapp as well as video conferencing tools like Zoom have taken centre stage as tools to assist female leaders to maintain morale and sustain business operations. 
 
In this newsletter, we will be covering the Government support and grants you should know about. We will also be sharing some upcoming webinar series and online events that you may be interested in, as well as news highlights we think might support you and help to drive your business forward after lockdown. 

GOVERNMENT SUPPORT
 
We know that financial help is vital to help support our female leaders who are struggling with the challenges of the coronavirus outbreak. The UK Government has created a new Coronavirus Business Support Hub. Here are some of the schemes on offer to help you and your business cope. We will be updating you on new schemes and changes to the schemes in our policy updates. 

1. Bounce Back Loans
 
This week, the UK Government announced the Bounce Back Loan scheme. The scheme will be delivered through a network of accredited lenders and help small and medium-sized businesses borrow up to £50,000 or 25% of turnover, whichever is lower. The scheme is not available yet. It will launch on 4 May 2020.

2. Coronavirus Business Interruption Scheme
 
Banks are helping SMEs by providing the financial backing they need through the government-backed Coronavirus Business Interruption Scheme (CBILS). CBILS is a term loan product offered in conjunction with the UK Government and the British Business Bank. A government guarantee is issued in favour of the lender, which allows banks to consider lending to viable businesses affected by coronavirus. 
 
The scheme is designed to support UK SMEs with a turnover of less than £45 million. You can find out more details and check your eligibility for the scheme here. 
 
For businesses with turnover greater than £45 million, you may be able to obtain the financial backing you need through a Coronavirus large business interruption loan.
 
Barclays is one of the accredited lenders. You can find out more here.
 
3. Support for our Start-ups
 
The UK Government has announced a £1.25 billion package to support start-ups through coronavirus. The Government’s Future Fund will issue convertible loans of between £125,000 and £5 million to startups seeking to bridge funding for working capital purposes. 
 
The funding must be matched by private investors and the Government will provide no more than 50% of the funding. The loans will convert to equity at the next fundraising round at a 20% discount, or a higher rate if the private investor demands it. The scheme will launch in May and remain open until September. You can find out the full details here.
 
4. Coronavirus Job Retention Scheme
 
The UK Government is also providing support through the Coronavirus Job Retention Scheme, reimbursing 80% wages, up to £2,500 per month, for employees on temporary leave (Furlough) due to coronavirus. Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities. 
 
The Scheme will be backdated to 1 March and available for at least three months. The online service was launched last Monday.
 
5. Self-employment Income Support Scheme
 
Self-employed people are eligible for a taxable grant, worth up to 80% of their average monthly profit over the last three years, up to £2,500 per month, for at least the next three months. You can find out more details about the scheme here.
 
6. Statutory Sick Pay
 
The cost of providing 14 days of Statutory Sick Pay per employee will be refunded by the Government in full to businesses with fewer than 250 employees. This will provide two million businesses with up to £2 billion to cover the costs of large-scale sick leave.

BARCLAYS SUPPORT AND OPPORTUNITIES 
 
1. Barclay Coronavirus Support Hub 
 
The Barclays coronavirus support hub provides the latest information, tools and guidance to support businesses throughout the COVID-19 pandemic. This hub includes information about Barclays’ products, webinars, Facebook live events and more information on how to access the government schemes. 
 
There is also an updated FAQs section on this hub, which provides the latest information for businesses. 
 
2. Barclays webinars 
 
You may wish to register here for an upcoming Business Resilience through coronavirus webinar looking at the challenges and support businesses require throughout this period. 
 
Alternatively, to find out more about the latest UK Government support packages for startups and scaleups, register for this webinar later today at 2pm with the Barclays team. 

This week, Juliet Rogan explains in a short video guide to Barclays Eagle Lab how the UK Government’s Future Fund will work. She looks at some of the details including convertible loan notes, interest rates and conversion processes. 
 
3. Checklist for Businesses - Dealing with coronavirus disruption 
 
Barclays has put together a checklist with practical guidance and useful resources to support you and your coronavirus business planning. You can check out the checklist here.
 
4. Female Founders Forum - 2020 Events
 
We are launching regional roundtable Eagle Lab events across the UK. It is an ambitious, far-reaching programme that will bring our tried and tested formula of successful think tank events from London to Manchester, Birmingham, Cardiff, Edinburgh, Southampton, Leeds and Newcastle. 
 
We will address four “scale-up” topics, with each roundtable focusing on a particular theme and provide you with more details about the events in our upcoming newsletters. 
 
The first event is due to kick off in September and will either be a physical or digital event, depending on local conditions and the lockdown. 
 
If any of these locations are convenient for you, or you know of any female leaders in these regions, we would like to get in contact. Please get in touch or pass on my details jess@tenentrepreneurs.org.
 
5. DIT Global Entrepreneurship webinars 
 
The Department of International Trade (DIT) is offering free webinars to UK Companies with experts presenting for 25 minutes and answering your questions to help you find solutions to the issues you are facing. You can sign up for the upcoming webinars here and view the previously recorded webinars here
 
FEMALE FOUNDER HIGHLIGHTS
 
Our Member Debbie Wosskow is taking AllBright's services online, with a series of new digital events aimed at turning self-isolation into career development. Debbie recently spoke with Monocle, urging women to “take on an entrepreneurial mindset”, discussing how this has enabled Allbright to pivot in real time and how other female led businesses can do the same.
 
Alexandra Daly, one of our Members and founder of AA Advisors, is developing digital solutions, including a series of podcasts, to assist clients as they seek to maintain dialogue with investors. Alexandra recently spoke with Private Equity Wire about how “people are hungry for information, but feel physically isolated due to Covid-19”. In Alexandra’s view, podcasts to communicate with LPs will be used by managers over the long term. Looking to the revival stage after the coronavirus pandemic, Alexandra discusses how she sees podcasts as a way to streamline the introductory process and could be used as an efficient way to raise capital.
 
Our Member, Annabel Karmel, whose children’s recipes are prepared by the Yum Yum Food Company, has set up a campaign to supply free, good quality food to NHS workers and vulnerable people.
 
Leah Hutcheon, founder of Appointedd, an online booking and business management software firm, is offering SMEs free access to their products to deal with clients and promote social distancing measures. Leah has been impacted by the crisis and wanted to “support those small businesses who had been worst affected”. 
 
Journolink, a business co-founded by Gemma Guise, is providing free services to SMEs to share their stories about how they are coping with the challenges of Covid-19 with journalists and broadcasters.
 
We want to inspire female entrepreneurs across the UK. Do you know any inspiring female entrepreneurs? Send them through to jess@tenentrepeneurs.org.

We will be sending through our newsletter every two weeks. If you share content with the hashtag #femalefounderforum, we will retweet you or repost it.

Subscribe to out Female Founders Forum email here.

Meet Your Match

On Monday the government announced the Future Fund, which will provide convertible loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. The loans will convert to equity at the next fundraising round at a 20% discount, or a higher rate if the private investor demands it.

An equity solution was a key ask of the Save Our Startups campaign, and while there are legitimate quibbles about the details – some of which will be worked out when the terms are updated – the alternative might have been no support at all.

Many startups won’t qualify, which is why the requirement to have raised £250k should be lowered to £100k. As Beauhurst has calculated: “That’s still a substantial enough hurdle for due diligence purposes whilst allowing another 2,302 of the most promising seed stage companies to participate.”

The Future Fund will launch in May. You can find the provisional headline terms here, Form Ventures has a useful explainer here, and on 30th April Digital Catapult has a webinar on how to access it which you can sign up for here.

Another Save Our Startups ask was the fast-tracking of payments to startups from public funding schemes. To this end, it was also announced that Innovate UK will accelerate £200 million of grant and loan payments for 2,500 existing Innovate UK partners on an opt-in basis, with an extra £550m available to increase the support on offer for these existing partners, and a further £175,000 for around 1,200 firms not currently in receipt of Innovate UK funding.

Sign up to our Policy Updates to get more details of both schemes as soon as they’re announced.

Satisfactory guarantee?
Last week’s rumour was around the imminent Future Fund. This week it’s the more public rumour that the Treasury is considering a 100% guarantee on loans up to £25,000. This is closer to the Swiss model, which we have previously called for. But as James Hurley of The Times cautions in a tweet: “On its own, a 100pc guarantee is not the incentive to lend with lighter checks many think it is. The guarantee is for individual loans, not the whole book. Book cap is 60pc. Also, the guarantee can only be claimed after the bank's own recovery action, not at point of default.” 

As the government tries to get to grips with the businesses still falling through the gaps in funding – just take a look at the #forgottenltd hashtag for a flavour of this – they’re going to need to start grappling with a new dimension of complexity. When lockdown restrictions are eased, some industries will be back up and running before others. 

We think the government needs to start communicating with businesses about its priorities for easing, and the policy leavers it will use to support those at different stages. Why would a pub owner, for example, take on a loan when it is possible that they will be shut for six months or more?

Of course, clarity on timeframes is impossible at this stage. But more clarity on the latest thinking on processes and priorities would be welcomed by business owners as soon as it’s available.

Environmental goals 
Following our successful partnership with the Enterprise Trust on the Unlocking Growth report, we’re pleased to announce that we’re undertaking another report – this time on the way that entrepreneurs and government can support environmental goals.

For the first stage of this project we’re inviting a small group of entrepreneurs and policy experts to become advisers to guide and promote the research. The project will audit what is already being done to support the environmental objectives, to what extent they are effective, and what might be done differently. 
 
Alongside the more technical overview, we will interweave case studies of companies that are innovating in the environmental sector. This would tease out both specific challenges of the sector (e.g. applying for grants, selling into government etc.), as well as general challenges of scaling innovative companies.

If you’re keen to get involved, drop the author Eamonn Ives an email to introduce yourself.

Read the whole thing here, and sign up here.

Finding the Next Brunel

Nowadays, the UK tends to take a build-it-and-they-will-come approach to attracting the world’s top scientific and innovative talent. We find ways to lower barriers to entry and make the country generally more attractive to skilled immigrants. But there are potential lessons from the past: beyond just liberal immigration rules for skilled workers, the UK has a long history of proactively identifying and persuading skilled workers to settle in the country – a policy that we might call promigration.

In the sixteenth century, for example, the government actively sought the services of foreign workers who might introduce new industries. Lacking local expertise to mine and refine copper, zinc, and silver, it arranged for hundreds of German metallurgists and their families to come to the country, with the eventual result of kick-starting Britain’s copper and brass industries. The foreign workers were granted denizenship rights by letters patent, and patent monopolies were granted to the companies that employed them. Even the go-betweens, who identified the relevant workers in Germany and arranged for their travel to England, were rewarded with lucrative lifetime pensions. After all, knowing whom to attract, especially when such industries were almost entirely absent in England, was an important skill too.

In the 1620s, too, skilled civil engineers like Cornelius Vermuyden were invited from the Netherlands to undertake the levelling of the Fens. Although the Fens project itself initially fell through, Vermuyden was apparently persuaded to remain by being given other commissions, and was naturalised as an English subject in 1624 – something that at the time would have required a special Act of Parliament. He was also soon knighted, and in the 1630s able to use his influence to obtain the denization of other Dutch workmen for new drainage projects.

Yet Britain was not alone in its promigration policies. In the 1710s, the Russian state actively enticed English ironworkers and steelmakers, and the French state used a go-between, Henry Sully, to bring English watchmakers and metallurgists to France by offering high wages and other perks. Many of those who left were manufacturers who had fallen into debt, and leapt at the chance for free travel abroad, thereby escaping their creditors and at the same time obtaining secure employment. With Britain having by this stage obtained a reputation for skilled mechanical work and metallurgy, these emigrations became a major source of concern for the state. In 1719, the government even banned the emigration of skilled artisans. This is obviously not something to emulate, and it was ineffective in any case, but the government spent vast sums ensuring that those who had already emigrated to France could be persuaded to return, paying for their travel, suspending their punishments under the new law, and even helping them negotiate their debts with their creditors back home. They even rewarded Henry Sully, the French enticer-in-chief, for turning re-enticer for the British.

Even with the UK’s unquestioned place at the forefront of mechanical engineering in the nineteenth century, the government was well aware of the tensions over talent. Indeed, had it acted less, then Isambard Kingdom Brunel might have become a famous Russian engineer, rather than a British one. His father, Marc Isambard Brunel, had fled the French Revolution first to America, and was then persuaded to move to the UK. But by the 1820s, when his son was still a teenager and off studying in France, Marc Brunel was imprisoned for debt. When it was made known that he was in talks with the Russian authorities about emigrating there, the Duke of Wellington and a few influential MPs persuaded the government to pay off his debts and get him released from prison, on the condition that he stay in the country. Had the government not intervened, it seems likely that young Isambard upon graduating would have either remained in France or re-joined his family in Russia rather than returning to England.

So what could the UK today learn from this history? The government of course already attempts to lower barriers to entry, for example with its Innovator, Start Up, Global Talent, and Investor visas. Some of these visas have had their flaws – in the first quarter since the Innovator visa route opened, for example, only two applications were successful, and some of the endorsing bodies have already begun to drop out – but the creation of these new routes shows that the government is serious about making itself attractive to scientists and inventors. There are simply details that need ironing out. Otherwise, the UK has tried to make itself more attractive to foreign innovators, for example by creating regulatory sandboxes in which companies can legally experiment with cutting-edge technologies like drone deliveries. The Enterprise Management Incentive scheme, which allows stock options to be taxed as capital gains, rather than as income, also makes it easier for UK startups to compete for talented managers with the much higher wages on offer in Silicon Valley. (Though in this case, in order to remain competitive, the maximum assets and number of employees that companies should have in order to qualify for the scheme should be raised substantially).

In terms of actual promigration policies, however, which are more proactive in identifying and encouraging people to move, there are far fewer examples today. One of the few might be the Global Entrepreneur Programme, which offers foreign entrepreneurs some assistance in relocating their companies’ headquarters to the UK, along with connecting them with experienced entrepreneurs to act as mentors, and providing introductions to networks of investors. Its success stories include the investment management company Nutmeg, which relocated from Silicon Valley, and the Australian train travel app Seatfrog. But it’s unclear to what extent the programme responds to requests – a more passive role – or actively identifies and persuades particular individuals and teams to move from abroad.

If history is any guide, then more could be done. One lesson is that the people who identify foreign talent and then arrange for them to immigrate should also be rewarded. It is a simple matter of incentives. Another lesson is that governments can attract foreign inventors, scientists and engineers by hiring them directly. This was done in the sixteenth and seventeenth centuries, and was the model pursued by the US and the USSR after the Second World War, when thousands of German engineers were persuaded to move (though in the Soviet case, forcibly). On the American side, among the 1,600 individuals who immigrated were many of the chief architects of its space programme, including Wernher von Braun. When the government itself does the hiring, potential immigrants are less likely to be fazed by the bureaucracy of visa applications. Likewise, the same might be done by private institutions with sufficient gravitas. The sixteenth-century Company of Mines Royal, for example, albeit a private company, had explicit backing from the government. And more recently, the Institute for Advanced Study, based in Princeton, New Jersey, actively recruited researchers who were fleeing European fascism in the 1930s. It became especially attractive to top researchers by not directing their studies, and by giving them no teaching responsibilities. As a result, it can boast having had two thirds of Fields Medallists and 34 Nobel Prize winners.

Whether or not such institutions can be replicated in the UK again, the government will have to step up its efforts if it is to remain competitive. Other countries are catching up on the tax treatment of stock options, while places like Singapore have been using promigration policies for decades. Singapore even came close to poaching companies in one of the UK’s most developed sectors: the Horsham-based company Creative Assembly, famous for making the Total War franchise of video games, actively considered moving in the late 1990s. The UK must look abroad, and to its own past, if it isn’t to lose out on a future Isambard Kingdom Brunel.

Word to the Wise

Word on the street – well, not literally of course with the lockdown – is that the Treasury is set to announce a package designed to respond to the concerns of the Save Our Startups campaign (and many others) regarding the failure of current schemes to support startups. If and when something is announced, we’ll send out details in a Policy Update.

On the theme of policy updates, here’s a list of seven things you might have missed in all the noise.

1. Coronavirus Job Retention Scheme Changes
The online claim service for the Coronavirus Job Retention Scheme will be launched on Monday. Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities. Employers can now claim for employees that were employed and on their PAYE payroll on or before 19 March 2020, and employees that were employed as of 28 February 2020 and on payroll and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.

2. New Coronavirus Business Support Hub
There’s a new Coronavirus Business Support Hub. The hub brings together key information for businesses including on funding and support, business closures, your responsibilities as an employer and managing your business during coronavirus. The hub also includes information for self-employed people and sole traders.

3. New Personal protective equipment (PPE) Hub
There’s a new PPE Hub. The hub contains guidance on PPE and infection prevention and control (IPC), containing information for sectors beyond just health and social care.

4. New Innovate UK Grants
Innovate UK has announced a £20 million for ambitious technologies to build UK resilience. Grants of up to £50,000 will be available to technology and research-focussed businesses to develop new ways of working and help build resilience in industries such as delivery services, food manufacturing, retail and transport, as well as support people at home in circumstances like those during the coronavirus outbreak.

5. New European Union Hackathon
The European Union has announced a pan-European Hackathon to develop innovative solutions to overcome societal challenges related to coronavirus. All 27 EU Member States are taking part as well as Norway, Israel, Switzerland, Turkey, Ukraine and the United Kingdom. The winning solutions will be invited to join a European Innovation Council Platform that will facilitate connections with end users (e.g. hospitals) and provide access to investors, foundations and other funding opportunities from across the European Commission.

6. Exporters Licence Changes
The Department for International Trade has revised arrangements for processing licence applications during the coronavirus (COVID-19) outbreak, and detailed changes and further clarification on compliance checks for open licences.

7. Companies House Changes 
Companies House has announced changes to help businesses avoid being struck off.

The Great Reopening
“The economy is not a machine that can be simply turned ‘on’ and ‘off’. It is a complex system, dependent on billions of relationships that are falling apart.” So opens Reopening Britain, a new paper released today by the Adam Smith Institute.

While acknowledging the need for the temporary shutdown of large swathes of the economy, the authors think many commentators are “substantially underestimating the damage being done and the challenge of reanimating the economy after the lockdown”.

The paper argues that the UK is falling behind other European countries – including Austria, Czech Republic, Denmark, France, Germany, Italy, Norway, and Spain – who have developed and are beginning to execute strategies to reopen their economies.

If the Government wants to safeguard lives and livelihoods they must develop, and release, a phased plan for lifting the lockdown to provide greater confidence for businesses, suggest the authors. A position also adopted by the new Labour leader Keir Starmer. The report also calls for the cutting of unnecessary regulation and taxes that discourage investment.

To a large extent uncertainty is an inevitable part of this pandemic, but the report is right to argue that the Government needs to mitigate this as much as possible. If they fail to adequately devise, implement and communicate a pathway back to a normally functioning economy – and all the stages in between – businesses will be left with no option but to further cut back on investment and production.

The government knows this and we should support their efforts to-date. But we shouldn’t shy away from pointing out when other countries are doing things better. That’s how we all learn.

Pandemics Past & Present 
The Economic Research Centre has undertaken a swift literature review on the impact of pandemics on SMEs. It draws out useful lessons to learn from past pandemics, but the data coming out of China, which is a few months ahead of us in facing and dealing with coronavirus, is perhaps the most instructive.

As the report states: “Early evidence from the COVID-19 pandemic in China emphasises the severity of the short-term effects on SMEs. In February 2020, 30 per cent reported that, due to a cash shortage, they would be able to sustain their business for no more than three months; 30 percent reported that they would be able to sustain their business for six to twelve months. Furthermore, 30 per cent of firms have seen their income fall by more than 50 per cent, with almost a third reporting a 20 to 50 per cent reduction.”

This dramatic economic impact only lends more weight to calls for the UK government to offer a pathway to reopening the economy. Our latest member of the team, Jess Etherington, has written more about the paper on our blog.

Save Our Startups

This week, we launched Save Our Startups. Alongside ten other founding partner organisations, and a further eighteen support partners, we’ve come together to call for an equity based liquidity package for UK startups.

In part, this campaign is a response to the fact that the Coronavirus Business Interruption Loan Scheme (CBILS) isn’t fit for many entrepreneurs. But it’s not a matter of one or the other – UK startups and scaleups need both debt and equity options.

Fixing CBILS
By the terms of EU state aid rules, CBILS cannot be used where an applicant was an “undertaking in difficulty” as at 31 December 2019. The devil is in the definition of “difficulty”, which includes many ambitious startups whose businesses don’t currently turn a profit as they invest to scale up.

But while state aid rules aren’t stopping other countries from being more generous than the UK, the likes of Germany and France are also struggling to get money out the door. Not so in Switzerland, where business owners can fill in a one-page form and get money in a matter of days. They have already distributed more than SFr15bn to 76,034 businesses.

As reported in the FT: “The Swiss scheme has two elements. Under the first, businesses can apply for an immediate loan, worth up to 10 per cent of their annual revenue, capped at SFr500,000. The loan is interest free and provided by Swiss banks, which are underwritten with a full credit guarantee on the amount by the Swiss government. A simple declaration is all that is needed. The second facility lends up to SFr20m, also provided by the banking system. Bern guarantees 85 per cent of the loan, charged at 0.5 per cent interest. The bank assumes risk of the last 15 per cent, charged at a competitive rate.”

Toby Austin and Henry Whorwood of Beauhurst suggest we should copy Switzerland, and Christian Faes of LendInvest argues today in Sifted, it should be adapted to the UK market by opening up the delivery of funding to UK fintechs. There are rumours of more providers, which would be another welcome pivot after last week's changes. But it must happen quickly.

Miss the point
There is no getting away from the fact that debt isn’t suitable for many startups. That’s one reason Save Our Startups already has thousands of signatories.

Despite the odd bit of good news, on the whole investment deals are falling apart, extreme write-downs are taking place, and early-stage funding is drying up. Nevertheless, a couple of investors on Twitter have come out against what they call a “bailout for startups”. Their criticisms are based on a misconception of what is being proposed and a misunderstanding of the economics of the situation.

The misconception is that the Save Our Startups campaign precludes a co-investment approach – that is, an equity solution that requires co-investment from other investors alongside the government. While we think that such a fund won’t serve the bottom of the market – many angel investors don’t have the resources to reinvest now – it would certainly be better than nothing.

The misunderstanding is confusing what is happening with a normal economic crisis. I am sympathetic to the idea that you should let companies go bust in a normal recession. After all, there is a danger in supporting firms during most economic downturns, as it risks capital and people not getting reallocated to more productive uses and so dragging out the recession. But as economists across the ideological spectrum agree  – most critically, including those of a free-market bent who tend to be against ‘bailouts’ – this time it really is different. 

Arguing that many of these firms will go bust in the future is wrongheaded. Yes, many will go bust, but some will go on to great things. You can’t have the winners, without the losers.

The government’s stated aim is to keep businesses intact so they’re ready to go when things return to normality. If we let a generation of startups go bust, there will be no reallocation of resources, but the destruction of our startup ecosystem.

Need for speed
It's not just loans that should be delivered more quickly. Save Our Startups also calls for the payment of R&D Tax Credits and Innovate UK funding grants to be sped up.

The founders of Stripe, PayPal, Linkedin, Shopify, and Y-Combinator (among others), understand the need for speed. That's why they've created Fast Grants. These entrepreneurs are trying to replicate the National Defence Research Council (NDRC), but for US scientists fighting coronavirus.

During World War II, the NDRC accomplished a lot of research very quickly. In his memoir, Vannevar Bush recounts: "Within a week NDRC could review the project. The next day the director could authorise, the business office could send out a letter of intent, and the actual work could start."

A lesson, surely, for both the UK government and philanthropic founders.

Read the whole newsletter here, and sign up here.

Most startups will fail, we should save them anyway

Two weeks into lockdown, many startups are on the brink. Unable to qualify for the Government’s Coronavirus Business Interruption Loan Scheme (CBILS), early-stage businesses will soon need a liquidity injection. In a piece for Sifted, I argued that we need urgent intervention and set out what that might look like, and as an organisation, we are a founding partner of the Save Our Startups campaign.

The key call by the Save Our Startups campaign is for an equity-based solution for startups to complement the debt-based solutions on offer for most businesses. On Twitter, it has provoked a debate between VCs and startup founders over the form that support should take.

Some argue that the limit of government intervention should be co-investment. In other words, only investing public money when investors have skin in the game. Others are calling for a not-for-profit Runway fund where the BBB would invest directly in early-stage (i.e. who have raised less than £5m) in the form of convertible notes that convert to equity at the next funding round.

The former approach has clear advantages and in a normal recession, it would be a better option. It would free up capital and talent from failing businesses, while providing liquidity for the best bets. 

But this isn’t a normal recession. As Sam Bowman and I argued, a couple of weeks ago, there are key differences. The supply-shock is temporary. Mike Bird, from the Wall Street Journal writes: “It’s not like a meteor obliterated our productive capacity. It will come back”. The aim should be to freeze the economy in place to make the recovery as quick as possible. This is broadly the approach the government has taken intervening to ensure as many businesses as possible stay afloat. 

The slight complication is that many of the startups in question will fail anyway. As Matt Clifford writes: “Most startups do die, even in boom times. Jobs and capital are lost. It’s desperately sad - I have to deal with it all the time - but it’s a fact of a well functioning ecosystem. If we pour £Bs into propping up doomed companies, we’re storing up huge problems down the line.” 

Here I think Matt is overplaying it. The funding proposed would only be enough to keep them afloat to their next funding round. The loss-making nature of the businesses in question all but guarantees we won’t be left with zombie startups. For the non-viable businesses, there would still be a reckoning when the market recovers. The key risk is that the funds are wasted. 

But in the absence of funding for startups in the short term, many will take advantage of the Job Retention Scheme or cut staff altogether. If this is the case, then the net cost to the taxpayer of bridging funds is limited.  

But the cost of losing a generation of startups is large enough that we should be comfortable with losing some money on any intervention. Just as we are comfortable to lose some money on defaulted loans.

So why isn’t a co-investment approach sufficient? Many funds lack the ‘dry powder’ to reinvest. If you are backed by a VC with more funds to invest, then you will survive. But if you’re backed by angels or an EIS fund, then you may have real difficulty in going back for more investment. Angels, for instance, may themselves run businesses and prioritise saving them.

This wouldn’t be a huge problem if the VCs in question funded the lion's share of high-growth early-stage businesses. But that doesn’t seem to be the case. Data from Beauhurst shows that of the 1,634 early-stage deals raising between £100,000 and £2,000,000, the 20 largest VCs were only involved in 23 of them. Many of the rest will have relied upon EIS funds, Angel syndicates, and crowdfunding that are unable to reinvest. Co-investment may save the very best prospects but a lot of startups will be left out.

Some have talked about the ability of the startup ecosystem to recycle talent and capital but it can’t do that under current circumstances. Most investors will be risk-averse until the lockdown is over and workers will be extremely unlikely to change jobs.

There might also be a general deterrent effect. In the event of hundreds of startups going under in the next few months, while other sectors are insulated with government support. More people may choose the security of a large company over starting a new business. 

If that’s the case then it’ll mean a slower recovery and a less dynamic economy for years to come.

Saving Startups

As reported in our Policy Update earlier today, the Coronavirus Business Interruption Loan Scheme (CBILS) has been overhauled.

The Chancellor announced the extension of loan guarantees to all viable SMEs – not just businesses who couldn’t access a loan on commercial terms; banks are no longer able to ask for personal guarantees on loans of £250,000 or less; and, the government has announced a new Coronavirus Large Business Interruption Loan Scheme to help the “missing middle”.

Read the statement here, find out more about CBILS on the British Business Bank website and sign up to our Policy Updates here.

We mind the gaps
The CBILS reforms are welcome, but there are important gaps – particularly for ambitious startups and scale-ups. 

Businesses can only access the loans if they would have met banks’ lending criteria in normal times. As a result, loss-making equity-backed startups aren’t eligible. As I’m sure you know, the reason these startups are loss-making is because they’re investing for growth. 

Under normal circumstances, many of this cohort of businesses would go on to produce revolutionary products and services, employ hundreds of people and pay significant tax revenues to fund our public services. But these aren’t normal circumstances. Liquidity is going to dry up and these businesses need support to see them through to the other side of this crisis.

Our research director Sam Dumitiru has set out what we think needs to be done in an article for FT’s Sifted, which I encourage you to read and share.

We think the proposed Runway Fund would help plug the gap. As Sam writes: “It would give early-stage businesses up to £500,000 to take them to their next funding round. Startups would get the cash in return for loans that convert into equity at a discount at their next funding round. A £300m non-profit fund with co-investment from the private sector would be able to help 600 startups. To put that in context, that’s around half of all early-stage equity-backed startups in the UK. This shouldn’t come with a large fiscal cost either. In the long-run, venture capital is a high-performing asset class.” Led by Brent Hoberman and our friends at Coadec, this scheme – or something like it – is vital.

On CBILS, we think the government should broaden the definition of viable to take account of unit economics on current products, past adherence to budgets and credit history. As Elvie, one of Britain’s fastest-growing scaleups, with an eight-figure valuation and profitable product lines, told Sam: "Last year alone we grew revenue by more than 400% and we’re on track for similar growth this year. However, like other hyper-growth tech companies, Elvie is not yet profitable. This means we are unable to access any support under CBILS because of rigid affordability criteria.”

Also, a temporary tweak to Venture Capital Trust (VCT) rules could act as a lifeline for companies they fund. “In normal times, VCTs are restricted from investing more than £12m (£20m for knowledge-intensive startups) in a single company to ensure the scheme is targeted at businesses that otherwise couldn’t raise sufficient capital. If the limits were temporarily raised, the scheme could be repurposed to allow startups to raise bridging capital from investors they already work with.”

This isn’t the only gap – for example, read the ERC’s study on how 750,000 self-employed are missing out on UK coronavirus support – but it’s a glaring one. And these aren’t the only solutions, but we think they should be prioritised. If we don’t act, this will cast a long shadow over the UK’s economic recovery.

A time to innovate 
Innovate UK will invest up to £20 million in innovation projects. The aim of this competition is to support UK businesses to focus on emerging or increasing needs of society and industries during and following the Covid-19 pandemic. By fast-tracking innovation, Innovate UK hopes the UK will be better placed to maintain employment levels, a competitive position in global markets and make the UK more resilient to similar disruption.

Your application must demonstrate both realistic and significant benefits for society (including communities, families and individuals) or an industry that has been severely impacted and/or permanently disrupted by the Covid-19 pandemic.

The project’s eligible cost must be between £25,000 and £50,000. You can claim 100% of your project costs up to the maximum of £50,000 and these will be paid in advance of the project start date. The competition closes on 17 April 2020. Find out more here.

Growth hubs
One local resource we haven’t mentioned in these newsletters so far is Growth Hubs. These are local public/private sector partnerships backed by the Government. The network of 38 Growth Hubs across England are free to use and should be able to advise businesses on local and national business support – including schemes put in place to help businesses through the current Covid 19 situation. 

I should say, we have had mixed reports about how useful they’ve been in the past. But you might be lucky to live in an area with a particularly good one, or, like so many individuals and organisations, I wouldn’t be surprised if they’re rising to this very significant challenge. Find your local hub here.

Stay in touch
We’ve created a short survey to help you keep us updated with how the government schemes to support you and your business are actually working. If you give permission, we can pass on your thoughts to the government and/or the media. I’ll still get back to you via email, but this should make it easier for us to keep track of the hundreds of emails we are getting. Feel free to update us here, whenever you have something that you want to share.

Read the whole thing here, and sign up for our newsletter here.

O? Yes He Did

Though mostly stuck at home, the world is in flux. 

Countries the world over are putting forward ambitious schemes to support their businesses. As we argued very early on, this extraordinary situation calls for an equally extraordinary response from the government: “We should be aiming to keep our economy in stasis, so that it is in as good a position as possible to bounce back.”

The UK Government gets this, but there are still some glaring gaps – particularly for equity-backed startups. Although they represent a small proportion of all businesses, they will have a disproportionate impact on job and wealth creation. They build the products and services that enrich our lives.

We think we should be backing pre-revenue innovative businesses, specifically with convertible notes for early-stage startups, which would convert to equity at a later date. The leaders of Britain’s most ambitious businesses need this government injection because these businesses don't suit the risk appetite or lending criteria of traditional banks. 

Cédric O, France’s impressive Minister of State for Digital Affairs, is ahead of the curve here. He has spearheaded a $4.3B plan to support France’s startups, of which $86.7 million will be used to support equity-backed businesses: “Startups that were in the process of raising a new funding round will be able to raise a bridge round through Bpifrance’s PIA (Programme d’Investissements d’Avenir). Some VC firms might retract term sheets, others might slow down their investment pace. Bpifrance is putting $86.7 million (€80 million) on the table. Private investors will co-invest as much as $86.7 million (€80 million) as well.”

Startups in co-working spaces and accelerators need support too. As we argued in our submission to the Treasury Committee: “Many startups will not benefit from the small business grant funding available for small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief, as they work out of co-working spaces or incubators, and accelerators. Grants aimed at small businesses that don’t pay rates should be extended to startups in these circumstances, if they don’t they risk stifling a vital source of future job growth. In lieu of accurate valuations, the government could use employment and tax data as a proxy.”

The Government also needs to ensure that co-working spaces and accelerators are around to support the recovery. The UK’s entrepreneurial success has grown out of a favourable ecosystem. We need to protect it. The Government will also need to look at whether tax breaks can be tweaked or regulations reformed or delayed – even if temporarily – to support entrepreneurs at this most challenging time.

And finally, we need to hear more about what you need on the ground. No one person or organisation has all the answers. Knowledge is dispersed – help us gather the best of it by sharing yours with us.

It pours
Every other day we’re greeted with an announcement of gargantuan proportions. But rather than run through it all for the umpteenth time, I want to make sure everyone knows where to turn for the right details. While we’ll continue to keep you informed with our Policy Updates which you can sign up for here, the best place to go for the latest information is GOV.UK. Specifically, the Guidance for Employees, Employers and Businesses and the Business Support.

Scotland, Wales, and Northern Ireland have additional guidance, while the British Business Bank hosts useful information for anyone interested in finding out about the Coronavirus Business Interruption Loan Scheme (CBILS). We know there are issues around how the loans are being rolled out. Please keep us updated on how this is working on the ground and we will pass on your concerns to the right people.

Beyond government, you can find a list of the business organisations that have useful coronavirus hubs on their website in the latest APPG Digest, while for those on Twitter I’ve made a Twitter List of government and business organisations you can follow, which might prove useful for cutting through the noise.

We need you
Zenia Chopra, an Adviser to the Network, has put together a short policy update on how visas will be impacted by coronavirus. We're looking to do more of these sorts of articles from outside experts. Just get in touch if you want to help us keep the thousands of entrepreneurs updated on your area of expertise in this challenging time.

Eyes on the prize
Anton Howes, the newest member of our team, has been taking a longer view than many. While coronavirus started with a bat (or pangolin), innovation will finish it off. But this won’t be the last challenge of this sort, and Anton has been looking at how the government can best promote innovation, whether directly with cool hard cash, incentivised by prizes or an Advanced Market Commitment, protected with patents, or fast-tracked with government patent buyouts. It’s a must read for anyone who cares about how we can help mitigate future pandemics.

Anton concludes: “As we look to fight coronavirus and any future pandemics, we should perhaps consider which patents — for antivirals, vaccines, ventilators, and other hygienic equipment — might be bought out in order to remove similar innovation bottlenecks. Whether we decide to use prizes, Advance Market Commitments, or patent buyouts, now is the time to experiment with any new ways to encourage innovation. As the coronavirus has shown us, increasing innovation is a matter of life and death.”

For further reading, check out this new paper on how grand innovation prizes could help address the coronavirus pandemic.

A good note
Along these lines, our friends at Nesta are looking at a number of approaches to the pandemic, considering how best to use innovation methods, such as Challenge Prizes, to support public wellbeing during the crisis, and are exploring how Edtech AI could best support home-schooling. They’re also coordinating community groups, and direct grant funding of some external organisations, and have also supported apps such as GoodSAM, which is playing an important role in coordinating NHS volunteers. Watch this space!

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Innovation: Eyes on the Prize

Scientists and innovators all over the world are doing their bit to combat the pandemic, be it through developing vaccines, testing antiviral drugs on patients, coming up with apps to help people mitigate its social effects, or ramping up production of ventilators and testing kits.

Yet the world may also need to experiment with different ways of encouraging innovation. We can rest assured that there will always be people to bend their minds to such tasks, but the more we can support and encourage them to do so, and for more people to join their ranks, the better.

Direct Funding

Governments all over the world have generally responded to the threat by pouring more money into funding scientists and innovators directly. The European Commission, for example, allocated €164m in grant money and other kinds of investment towards startups and smaller businesses that came up with innovative solutions to the crisis. Similarly, the UK government offered £500,000 to technology companies coming up with ways to support people having to stay at home, as well as pouring tens of millions of pounds into vaccination research. Many charities, larger businesses, and wealthy individuals have also offered support.

Prizes

In addition to direct funding, some governments have responded with prizes — to be awarded only in the case of success. Economist Tyler Cowen, for example, has announced a series of prizes totalling $1m for innovations in promoting social distancing, finding an effective treatment, and for written analyses of the virus. His colleague and long-time collaborator, Alex Tabarrok, has likewise called for governments to offer much larger prizes, in the billions, to find effective vaccines and treatments.

As Tabarrok points out, prizes for a vaccine should ideally be large enough that a pharmaceutical company would rather accept the prize and make the innovation available to the public, than patent it and use their monopoly to sell the vaccine at high prices. As much of the current work to find a vaccine is necessarily conducted by pharmaceutical companies — they have the resources and experience required, both to find a vaccine and then mass-produce it — any such prize needs to take their incentives into account.

Prizes of this sort might be in the form of a lump sum, but for a vaccine it probably makes more sense to tie it to application. We don’t want a situation where a company creates a vaccine, receives the prize, and then it and its competitors have little incentive to actually produce it at scale. The model that may work best here, instead, is to adopt a policy developed by Nobel-prize-winning economist Michael Kremer, the Advance Market Commitment. 

Advance Market Commitments

The policy was used in 2007 to promote the creation of a pneumococcal vaccine for use in developing countries. The problem was that pharmaceutical companies lacked the incentives to create and sell such a vaccine, as those who most needed it would not be able to afford a price that would allow the companies to recoup their research costs.

In response, five governments, along with the Bill and Melinda Gates Foundation, committed $1.5bn to a prize fund. Rather than an up-front prize, pharmaceutical companies bid for 10-year contracts to create and produce the vaccine, to be sold for no higher than $3.50 per dose. The prize money was then used to supplement the amount the company received for each sale. Over the following years, three vaccines were developed, now available for only $2 per dose, which have been administered to over 150 million children. An estimated 700,000 lives have been saved. Thus, although vaccines and treatments against coronavirus are already being developed, the use of such a policy might help make it affordable all over the world — wealthier governments have the funds necessary, though some private benefactors might also be encouraged to commit.

Patents

For the most part, however, businesses will tend to put their own financial resources into developing solutions to the crisis. There is, after all, plenty of demand, and patent protection gives them a temporary monopoly to sell whatever they find. Yet there have been a few cases during the crisis where patents have got in the way of finding solutions. In Italy, for example, when some hospital ventilators broke down the manufacturer was unable to supply new parts quickly enough to save lives. A couple of local 3D-printing companies stepped in to fill the gap, but when they asked the manufacturer for the schematics, it refused and even threatened to sue them for patent infringement. Although the 3D-printing companies went ahead with their infringement anyway and have thus saved many lives, this is not an isolated case. Two patents formerly owned by Theranos, which collapsed when its much-vaunted blood-testing equipment turned out not to work, were apparently being used by their new owners to prevent BioFire from making much-needed testing kits for the coronavirus. Following public outcry, however, the patents’ new owners clarified that their legal action would not cover anything to do with coronavirus.

In both such cases, the public’s reaction has been enough to stem legal action, or to at least embolden the infringers. But when designing innovation policy, we should be careful not to throw the baby out with the bath water. We want pharmaceutical companies to have sufficient incentive to devote major resources to solving the pandemic’s problems, for which we would want to preserve patent protections. We should not rely on their charity or public spirit alone, and patents will be especially vital if we are to find solutions to future pandemics as well as the current one. Ideally, we should preserve the incentives conferred by patent protection, both to invent and to make the details of inventions public, but without the downsides of monopolistic pricing: something achieved by another policy, the patent buyout.

Patent Buyouts

Rather than a prize, the patent buyout involves the government purchasing a patent from its owners and making it open and available to the public to use. The British government has in the past purchased patents or secrets in order to make them public: in 1732, for example, instead of extending the duration of Thomas Lombe’s patent for silk-spinning machinery, it awarded him a large reward. The only condition for receiving the reward was that Lombe had to submit a scale model of the machinery, which was exhibited for public view in the Tower of London. Likewise, the government purchased the secret to Joanna Stephens’s “cure” for bladder stones in 1738 (despite extensive testing by fellows of the Royal Society, it did not work for the reasons they thought it did — rather than a cure, it was in the nineteenth century revealed to be merely palliative). As for purchasing patents, rather than secrets, the best-known example is the French government’s 1839 purchase of Louis Daguerre’s patent for photography, which it then made available to the rest of the world (except the UK, where Henry Fox Talbot had invented a rival process).

The issue with buying out patents, however, is in how to price them. If the government sets a price that is too low, then inventors will be unwilling to sell their rights. And if it purchases the patent compulsorily, as might become necessary during an acute crisis, then offering a price that is too low would be expropriative, thereby damaging the incentive effects of the entire patent system. Fortunately, economists have been exploring how to resolve this issue for the past two decades, again drawing upon the work of Michael Kremer.

In 1998, Kremer suggested using auctions to discover patent prices for a government buyout. In his scheme, private parties would bid on a number of patents being simultaneously considered for a buyout, but only a small and randomly selected proportion of the patents would actually be sold to the private bidders rather than being purchased by the government — that way, even if they actually only received a few of them, the bidders would still have an incentive to provide accurate valuations for all of the patents, allowing the government to discover their market prices. Rather than seeking to replace patents, as prizes often try to do, the patent buyout would be a useful supplement.

And it is a policy that would make a difference to the long-term fight against pandemics, too, by removing bottlenecks to future innovation against pandemics. The buyout and opening up of Daguerre’s patent in 1839 unleashed a period of extraordinary creativity in photography, and the expiry of important patents can often have a similar effect. It was only in the 2010s, for example, that many of the patents for fundamental techniques in 3D-printing began to expire, unleashing even more innovation in the area. Although the technology had been around since the 1980s, the number of related patent applications in the US had never exceeded 3,000 per year. But since their expiry, it has steadily and dramatically increased, to almost 45,000 last year. A buyout of those patents, rather than waiting for their expiration, might have given us this progress decades earlier.

As we look to fight coronavirus and any future pandemics, we should perhaps consider which patents — for antivirals, vaccines, ventilators, and other hygienic equipment — might be bought out in order to remove similar innovation bottlenecks. Whether we decide to use prizes, Advance Market Commitments, or patent buyouts, now is the time to experiment with any new ways to encourage innovation. As the coronavirus has shown us, increasing innovation is a matter of life and death.

APPG Digest: Supporting Entrepreneurs

NB. The self-employment concerns raised here were made prior to the Chancellor’s latest announcement.

This will be a different format to our usual email. We are addressing it directly to Members of Parliament, but I hope it's useful for Peers and the thousands of others who are signed up for it.

It is designed to help you point entrepreneurs in your constituency in the right direction, and update you on what the challenges are on the ground.

Five Steps Entrepreneurs Can Take
 
There is so much information out there that I want to keep it as simple as possible. The government is asking us to direct business owners to this website and this one too. I would also suggest you point entrepreneurs towards the British Business Bank website for details of the Coronavirus Business Interruption Loan Scheme (CBILS), and specific information for businesses and employers in Northern Ireland, Scotland, and Wales.

This is what the Government is suggesting, which we are passing on:

1. Get help with your finances
For small and medium sized businesses, the new Coronavirus Business Interruption Loan Scheme is now available for applications. For more information and how to apply, visit this website. You can also speak to your bank or lender to discuss options. The Bank of England’s new lending facility for larger firms is also open for applications. Find out more on their website.

2. See what you're entitled to
The government is also making cash grants and additional funding available to certain sectors and smaller businesses. Find out more about the schemes available, whether you’re eligible and how to apply on this website.

3. Support your staff
Through the Coronavirus Job Retention Scheme, the Government will pay salaries (at 80% of current pay up to £2,500 a month) for workers who are no longer working and would otherwise be made redundant. For businesses with fewer than 250 employees, the cost of providing 2 weeks of COVID-19 related statutory sick pay per employee will be refunded by the Government in full. Find out more on this website.

4. Check guidance on tax
If you are concerned about paying your tax you can talk to HMRC about managing payments. We have already postponed upcoming VAT payments through to June, cancelled business rates for many sectors and delayed July’s self-assessment tax payments until January 2021. To find out more visit this website.

5. Follow the latest advice
The Gov website will be updated regularly as more information becomes available. The Prime Minister’s daily press conference, live streamed on the @10DowningStreet Twitter feed, will also provide the latest updates on health advice, support for businesses and employees, as well as a range of other issues.

Useful Business Hubs

Business organisations are working hard and collaboratively at this critical time. Many entrepreneurs find them vital for explaining how the dramatic changes taking place will impact their business.

For our part, we are keeping people through our Policy Updates, which can be signed up for here, as well as my Friday Newsle. But there many other organisations are better placed to update specific businesses. I would direct business owners to the following organisations:

• Federation of Small Business's online hub – particularly small businesses and the self-employed

• Enterprise Nation's online hub – particularly small businesses and the self-employed

• Tech Nation's online hub – particularly tech companies

• Confederation of British Industry hub – particularly larger companies

• IPSE hub – particularly the self-employed

• Institute of Directors hub – particularly the directors of established businesses

• Tech UK hub – particularly larger tech companies

• ICAEW hub – particularly for advisers of businesses

This is just the tip of the iceberg and there will be sector-specific organisations that might be better placed to help individual businesses; however, this should be a good place to start.

Business owners on Twitter might also want to follow this Twitter List, which might help filter out some of noise if they want timely information about what is being announced.

Challenges for Entrepreneurs

There is still a lot of work to be done. Following are some of the key challenges still faced by business owners:

An Update from IPSE
"In the last two weeks, millions of self-employed people have seen their income decimated, their projects indefinitely postponed and their contracts cancelled. Many we have spoken to say they have savings to last out up to two months of income interruption, but little more. We hope that the Chancellor will deliver a package of support that will keep our smallest businesses afloat during this crisis. This should give a time-limited, targeted cash injection to the freelance businesses that are struggling most. It is a significant ask, but it is what is needed to keep this vital sector going through these grave and unprecedented times."

An Update from Enterprise Nation
"The topic of questions in our support hub changed over the weeks; it started with questions on insurance cover and now mainly has moved to how to access money and how to furlough employees. There has been criticism of the CBILS in that it's not available to loss-making businesses and guarantees are being asked for. In response we submitted a paper to Treasury Select Committee on Monday with suggested proposals of how to distribute funds to small businesses and the self-employed through existing platforms and networks. That's available to view here."

An Update for the Federation of Small Business
"Cash flow continues to be vital for FSB members in the wake of this crisis. In addition, we’ve been urging the Government to bring parity of support to the self-employed in terms of wage coverage, in line with the Job Retention Scheme package for employees. We hope to see something in this area announced by the Government shortly. The challenge now moves towards ease of access and ensuring businesses can access cash and facilities like CBILS in a timely manner; as well as making sure all banks understand the immediacy of the situation and lend. We also note the cash grant facility is to be done at local authority level and are subsequently concerned about variation in delivery. Other challenges we are looking to address include securing further protections for tenants, mitigating the supply disruption and asking large businesses to pay their invoices now to ensure cash is available immediately for SMEs in this critical period."

An Update from Coadec
"Liquidity and cash flow have been consistently at the top of the list of concerns raised by startup founders over the last couple of weeks. We have had confirmation from lenders on the CBILS scheme that venture-backed startups will not qualify for loans under the scheme. We've been urging the Government to adopt an equity-based solution in order to provide bridging finance and capital to startups during this crisis. Since private funding is set to slow down, it is also vital that payments from public schemes - such as InnovateUK grants and R&D tax credits - are fast tracked. To protect the wider tech startup ecosystem, we are also urging the Chancellor to extend the one year business rates holiday, provided to hospitality businesses, to co-working spaces. Due to huge declines in membership and companies cutting costs to survive, this vital community resource is now at risk."

I can only echo the above concerns. At The Entrepreneurs Network, we set out what we think is missing here. It draws on the findings of many organisations and the flood of emails we're getting every day.

I hope this is useful. Please feel free to put any business owners directly to touch with me if they still have questions. I'm replying to everyone.

Sign up for future APPG Digests here.

What was missing in the Chancellor’s covid-19 plan?

The Chancellor has taken unprecedented steps to protect incomes and prevent coronavirus-related business failures. We welcome the policies announced on Friday. In fact, we advocated for similar measures, including the move to allow employees to be furloughed with pay and for tax payments to be deferred automatically. 

The measures are necessary because they allow us to preserve the valuable products, processes, knowledge and relationships that entrepreneurs have built over a number of years. That’s necessary if we want the economy to rebound next year. However, the measures are, not yet, comprehensive. There are three key groups in need of further support.

The self-employed

We welcome the Chancellor’s decision to allow the self-employed to defer income tax payments and to suspend the minimum income floor allowing the self-employed to claim the equivalent of Statutory Sick Pay. However, the measures will be insufficient for many of the self-employed, who will experience significant drops in income over the coming period. 

First, the £16,000 savings limit should be disregarded for the next six months. In some cases, the savings will be set aside for future tax payments that have now been deferred. As Mike Brewer of the Resolution Foundation notes: “The goal should be a more comprehensive version of the Coronavirus Jobs Retention Scheme that encompasses the self-employed.” Removing the savings limit temporarily will help align the treatment of the self-employed and the employed.

Second, the self-employed may experience significantly larger falls in income than an equivalent employee on the same income previously. For instance, a self-employed worker earning £2,500 per month will normally take home £470 after tax. However, if they are moved on to universal credit, their earnings will fall to £94.25 per week (plus local housing allowance). This is a much steeper drop than the 20% drop that an employee would experience. To protect the income of the self-employed, we agree with the recommendation of the Bright Blue think tank that the ‘furloughed’ self-employed receive should at least be equivalent to the Maternity Allowance, £148.68 per week.

Under this system many of the out-of-work self-employed would still receive less than an equivalent furloughed employee. While we understand the administrative challenge of accurately calculating earnings of the self-employed, we believe the government should consider temporary hardship payments based on a percentage of the past tax payments for the self-employed, subject to a cap to prevent large payments to high earners. A version of this idea has been proposed by Neil O’Brien MP and a similar system is being used in Norway. 

An additional way to support the self-employed and as well as high earners who have experienced a large temporary fall in income would be to create income contingent loans, modelled on student loans. Under the current student loan repayment terms, earnings above a certain income threshold (currently £25,716/year) are taxed at 9% to repay the loan, with any amount unpaid written off thirty years after the loan was first taken out. The loan incurs an interest rate equal to a measure of inflation (RPI) plus 3%. We could offer different plan terms to people availing of this scheme, cap the amount at a realistic level to reflect average earnings, and the repayment term to a short period of, say, five years.

Low earners would probably never pay back the entirety of the ‘loan’ – since this is a one-off cost, that simply transfers lost income to them from other taxpayers, and it is arguably a feature of this scheme, not a bug. Most other people, depending on their earnings and terms decided on by the government, would pay back as and when they were able to. 

The advantage of an approach like this is that it allows people to self-select into the scheme, eliminating any need for the state to try to decide who is and is not deserving of cash now. 

Equity-backed startups

Equity-backed startups that are not yet bringing in revenue will need targeted support as they approach the end of their funding runways. They are ill-suited to taking on debt as they can lack predictable revenues or security. As a result, many will be unable to benefit from the Coronavirus Business Interruption Loan scheme.

Equity-backed startups will be responsible for a large proportion of job and productivity growth once this is over, they should not be overlooked.

To help equity-backed startups, we support Coadec’s calls for the British Business Bank to create convertible notes of up to £500k. This funding would convert to equity at a startup's next funding round. 

SMEs in co-working spaces, incubators and accelerators

Many startups will not benefit from the small business grant funding available for small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief, as they work out of co-working spaces or incubators, and accelerators. 

There are 205 incubators and 163 accelerators in the UK. Over the past decade, more than 5,000 startups have participated in accelerator programmes in the UK with numbers increasing significantly year-on-year. The companies coming through accelerators are vital to the UK’s future economic growth. Research from Nesta, commissioned by BEIS, finds businesses that attend accelerator programmes have higher survival rates, employ more people, and raise more money. Accelerated companies raise 44% more money and have 75% higher valuations than companies that haven’t attended accelerators.

Grants aimed at small businesses that don’t pay rates should be extended to startups in these circumstances, if they don’t they risk stifling a vital source of future job growth. In lieu of accurate valuations, the government could use employment and tax data as a proxy.

Rishi Sunak’s bold measures will have saved jobs and businesses. The challenge now is to fill in the gaps with better support for the self-employed and equity-backed startups.

Taxing times

Over the past week, we’ve set out a range of policy ideas to help entrepreneurs get through the coming months. You can find most here. But as important as it is to put forward plans big enough to meet the economic challenge, it’s important to ensure that the tools we’re using to deliver them are fit for purpose.

One of the ways the government is trying to help businesses with their cashflow is by giving them leeway on their tax payments. Businesses can ring up HMRC on a special Coronavirus hotline and agree to spread the bill over 12 months (with interest).

On Twitter, Clifford Chance’s Dan Neidle points out a potential hitch. “Micro and small businesses may not have access to advisers… [while] HMRC won't have capacity to deal with millions of time to pay requests.”

He suggests an alternative. The “Government should put "time to pay" arrangements on a statutory footing, at least for the short term, with automatic deferral for small and micro businesses.”

We agree. Anything that reduces uncertainty for small businesses right now should be welcomed.

What it Takes

Earlier this week Rishi Sunak vowed to do 'whatever it takes'. Today we have set out what needs to be done to ensure British businesses survive coronavirus. Sam Dumitriu (Research Director) and Sam Bowman (Adviser) have set out why these exceptional circumstances call for exceptional policies. 

If you’re not going to read the whole thing, here are four key passages:

1. “Solvent businesses may still go bust without additional liquidity – government-backing for business loans is one solution to this, so that they can access credit. But the problem is much bigger than that. The financial hit of several months of low or no revenues, while overheads such as wages and rent still need to be paid, will push businesses that would otherwise have been solvent into insolvency. This is not simply a credit issue – the overhang of those costs means that as we come out of the downturn, many would struggle to pay back any debts incurred.”

2. “We should be prepared to bail out small businesses – provided they keep their workers. Steven Hamilton and Stan Veuger have a novel proposal targeted at SMEs. Loans would be issued to cover any fall in revenue experienced by a participating business relative to previous years (with a benchmark level to be determined for new businesses). However, unlike the Business Interruption Loan Scheme announced by the UK Government, businesses would also receive a tax credit equal to the full loan amount including interest, provided that the business maintains its full-time-equivalent (FTE) payroll through the duration of the crisis. In effect, if a business does not lay off its employees they do not have to pay the loan back. The plan would also cap the net income (after tax credits) of businesses receiving the loan at a given percentage of previous years’ net income, to prevent companies from making windfall profits by cutting variable costs."

3. “A solution that may be easier to implement is to essentially ‘hack’ the statutory maternity pay system and apply it to all workers. The Resolution Foundation is proposing a Statutory Retention Pay (SRP) scheme in which people who don’t have work to do stay formally employed by their firm, but with a significant amount of their pay covered by the state. If the rate were set at 66% (and 80% for workers earning less than £189 a week), then it would cost £8bn if a million workers took part in the scheme. But we should be prepared to borrow and spend much more than that if necessary. The scheme has parallels with the Danish response to the virus, where employers are able to grant a paid leave of absence to their workers. The government will pick up 75% of their salaries, with the employer paying the rest. At the same time, workers agree to give up entitlements to paid holiday."

4. “Startups that are not yet bringing in revenue will need targeted support as they approach the end of their funding runway. These are ill-suited to taking on debt, such as the Business Interruption Loans, and are unlikely to benefit from rates relief or grants, as many use co-working spaces. Startups will be responsible for a large proportion of job growth once this is over, and cannot be overlooked. Two measures should be targeted at them. First, grants aimed at small businesses that don’t pay rates should be extended to startups in co-working spaces. In lieu of accurate valuations, grants could be limited to at startups with fewer than 10 employees. Second, instead of loans the British Business Bank should back convertible notes of up to £500k for early-stage startups. The notes would convert to equity at a later date and avoid the problems of issuing loans for pre-revenue innovative businesses.”

Read the whole thing. Share it widely. These policies will do a lot of the heavy lifting but this isn’t meant to be the last word on policies needed to support entrepreneurs  – and it won’t be ours – so let Sam know what else you need during this most challenging time. (Please see below about how to ask specific questions about government support).

Innovators vs, the virus
We may live in interesting times, but many incredible entrepreneurs, inventors and scientists around the world are fighting back. 

Dr Anton Howes, our new Head of Innovation Research, has explained exactly how. It covers a lot, including:

• Seegene, a South Korean company using artificial intelligence to rapidly identify a test for the virus; 

• The Kaiser Permanente Washington Health Research Institute’s 6-week trial of a prospective vaccine with a cohort of (brave) healthy adult volunteers;

• Scottish whisky distilleries and London gin-makers shifting production to manufacture sanitiser;

• Crowdfunder.co.uk, which with support from Enterprise Nation has opened up their crowdfunding platform for free to businesses affected by Coronavirus;

• Dare to Care Packages (which we’re a Partner of), which is helping to link up healthy people in London with those who may need deliveries of essential supplies while they are self-isolating;

• Bubble, which is supporting hospital staff and other key workers to find vetted babysitters while they go to work.

Read it and share it. We all need a healthy dose of inspiration. And let Anton know of any other amazing work that’s being done in the UK and around the world.

In fact, the Government needs your help. They’ve set up three dedicated emails if your business feels able to support their efforts:

• On vaccines, email: Nervtag@phe.gov.uk

• For Ventilators, email: ventilator.support@beis.gov.uk

• Offers of innovation and tech, email: DNHSX@nhsx.nhs.uk

And applications for funding to the European Commission are welcome until 5pm today from startups and SMEs with innovative solutions to tackle Coronavirus outbreak.

Any questions?
We are asking the Government and supporting bodies the questions you want answers to. A lot of this is feeding into our thinking about what's needed so keep them coming! Below cover the main thrust of the many I’ve received so far.

Questions on the Coronavirus Business Interruption Loan Scheme

• How will the Coronavirus Business Interruption Loan Scheme differ from the Enterprise Finance Guarantee (EFG)? Will it be less bureaucratic and easier to get?

• Are loans appropriate for pre-revenue startups?

• Has any modelling been done on how many applications are expected from launch next week and how long is it going to take to work through them all? 

• What constitutes a valid case for a loan?

• Will the British Business Bank be too risk-averse?

• What is the timeframe for repayment of the loans? Initially one year was mentioned, but the Chancellor in front of the Treasury Select Committee spoke of a ‘long term basis’.

Questions on other policies

• The government wants business owners to keep on employees, but is this really a long-term strategy when it is expected to be funded by business borrowing?

• What about businesses working in the supply chain of businesses severely impacted by this?

• Are businesses that aren’t paying business rates being left out?

• Do co-working businesses and the businesses themselves need to be better supported to help with the eventual recovery?

• Would it help if tax breaks, such as SEIS / EIS, were made temporarily more generous?

• What support will be offered to the self-employed and freelancers?

• Will a lockdown limit the ability for key employees to go to work?

Stay updated with how policy changes might impact your business, sign up to our essential Policy Updates. You can read previous ones here. 

Read to whole newsletter here, and sign up here.

How the UK economy can survive the coronavirus

The UK is shutting down, and a recession is inevitable. Rishi Sunak has vowed to do ‘whatever it takes’ to protect incomes, businesses, and jobs. But what should he actually do?

It is essential that he, and the British public more widely, realise that this is not a ‘normal’ recession like ones we experienced in 2008-09 or the early 1990s. If we treat this recession as a normal recession, it could cause lasting damage to the economy even after we end quarantine measures, and make it even harder to beat this virus before then.

In a normal recession, the government should generally not bail out failing businesses. Instead, while keeping the overall macroeconomy stable with monetary and fiscal policy, they ought to let insolvent and unprofitable businesses go bankrupt, bail-in banks, and support workers as they move to new jobs. We didn’t want Blockbusters and Woolworth’s to survive the Great Recession, we wanted capital and labour reallocated to Amazon and Netflix. Normally, we want a post-recession world to look different to the pre-recession world. 

But this isn’t a normal recession.

First, it’s self-inflicted. When the Prime Minister tells us to work from home and avoid pubs, cafes, and restaurants, he is in effect calling for a reduction in economic activity. That’s absolutely right from a health point of view, but trying to ‘get the economy moving’ by using traditional stimulus policies is in direct conflict with this goal.

Second, it’s (probably) temporary. This will pass. We will eventually develop treatments and vaccines for this disease, or at the very least introduce a workable system to detect and contain it, and eventually life should mostly return to normal. Some sectors may be permanently less profitable, but most won’t. 

Third, it doesn’t care if you’re profitable or solvent. There is no reason to think that good, as in profitable in normal times, businesses will be any more able to weather the storm better than bad businesses. In fact, the opposite may be the case – highly productive businesses that have higher overheads (like labour or rental costs) will be more badly hit than less productive businesses with lower overheads.

Fourth, it’s not failing businesses’ fault. Unlike in the financial crisis, where the promise of bailouts may have incentivised banks to take excessive risk, that kind of moral hazard isn’t a concern here. On this point, we agree with Jonathan Portes: “It’s hardly reasonable to suggest that your local Thai restaurant should have made a business plan that took into account the risk of a three month pandemic-induced shutdown.”

Fifth, there is no obvious private alternative. The costs of this shutdown are so large and so widely shared across the economy that it is difficult to imagine a private body that could insure against this risk. Insurance usually works when costs are not borne by everyone at once, so it can use the premium payments of those who have not incurred a cost to provide cover to those who have. When costs are borne by as large a group of people as these, the cost-shifting has to be across time, and in as large a case as this, only the state may be able to do that amount of cost-shifting.  This, and the fact that they are mostly once-off, is why we are relatively relaxed about the cost of these measures: there may be some free market ‘nirvana’ where a private agency did the cost shifting, but in our world the state must act as the next best alternative.

Because of these factors, many of the remedies we would usually support during a recession may backfire. Our immediate aim should not be to prevent a sharp reduction in economic activity – unusually, this is the goal. We do not want people going out and spending in bars and restaurants. The economic priority is instead to facilitate this sharp reduction in economic activity, but doing so in a way that doesn’t cause long-term damage to the economy.

First, we should distinguish between two different kinds of business that may be threatened with bankruptcy during this period. Solvent businesses may still go bust without additional liquidity – government-backing for business loans is one solution to this, so that they can access credit. But the problem is much bigger than that. The financial hit of several months of low or no revenues, while overheads such as wages and rent still need to be paid, will push businesses that would otherwise have been solvent into insolvency. This is not simply a credit issue – the overhang of those costs means that as we come out of the downturn, many would struggle to pay back any debts incurred.

As for workers, many simply cannot work remotely. Most of them will either be laid off or have their hours cut significantly, with little prospect of alternative work for many of them. The short-term hit will be painful to anyone affected by this. And, if we expect to go back to normal at some point after this, it will be enormously wasteful.

As Steven Hamilton and Stan Veuger write, we don’t want to lose “the valuable things these businesses have worked hard to build—the products, processes, knowledge and relationships that make them unique.” Entrepreneurship isn’t easy. You can’t simply re-assemble a business overnight. And matching workers with the best jobs for them is a slow, difficult process – consider how long you have spent in your life looking for new jobs and carefully deliberating about the best option between different choices.

Economic policy when every day is like Sunday

To avoid this, we need a response that keeps much of the economy in stasis for the shutdown period. As much as possible, businesses should be kept alive and workers should stay attached except when normal factors might lead them to leave – a better offer elsewhere, say. The aim should be to keep as many existing business relationships alive and viable as possible, so that they can return to normality once the shutdown period is over. A temporary fall in economic activity need not lead to a depression. As Wojtek Kopczuk notes, “the economy does not collapse on weekends and it does not collapse in Europe in August when seemingly nobody works.”  We should be aiming to keep our economy in stasis, so that it is in as good a position as possible to bounce back, almost as if we were an off-season seaside resort. 

The policy response should be designed to protect businesses, protect jobs, and to protect affected individuals. Support for the unemployed and inactive self-employed will be important, but the priority is to keep workers on payroll, even if they can’t actually work. This could be achieved in a number of ways that could be rolled out soon, some using existing payment mechanisms and administration to act swiftly. 

Remember that these are not intended to be economic ‘stimulus’ in the conventional sense of trying to increase economic activity. They are not really ‘macro’ policies at all. Rather they are policies designed to keep individual firms and workers afloat during the next few months - a ‘big micro’ approach, you might call it. We’re also relatively relaxed about large businesses that can access capital markets, and so in general can access support that way if they are long-term viable.

Saving businesses

First, we should be prepared to bail out small businesses – provided they keep their workers. Steven Hamilton and Stan Veuger have a novel proposal targeted at SMEs. Loans would be issued to cover any fall in revenue experienced by a participating business relative to previous years (with a benchmark level to be determined for new businesses). However, unlike the Business Interruption Loan Scheme announced by the UK Government, businesses would also receive a tax credit equal to the full loan amount including interest, provided that the business maintains its full-time-equivalent (FTE) payroll through the duration of the crisis. In effect, if a business does not lay off its employees they do not have to pay the loan back.The plan would also cap the net income (after tax credits) of businesses receiving the loan at a given percentage of previous years’ net income, to prevent companies from making windfall profits by cutting variable costs. 

The benefit of this scheme is that it makes support for businesses conditional on keeping workers attached. The key drawbacks are that it’s untested and may be difficult to roll out quickly, because there are no existing institutions we can adapt to do it. Dr Michael Ryan of the WHO didn’t have the economic response in mind when he said that “perfection is the enemy of the good when it comes to emergency management. Speed trumps perfection”, but his logic applies here too. The challenge is putting something in place that will stop layoffs now. If this takes weeks to assemble, many businesses may start laying-off workers immediately. Making it clear, urgently, that this kind of structure will be in place may lead firms to hold off on layoffs, even if it takes a few more weeks to put it into place.

Second, a solution that may be easier to implement is to essentially ‘hack’ the statutory maternity pay system and apply it to all workers. The Resolution Foundation is proposing a Statutory Retention Pay (SRP) scheme in which people who don’t have work to do stay formally employed by their firm, but with a significant amount of their pay covered by the state. If the rate were set at 66% (and 80% for workers earning less than £189 a week), then it would cost £8bn if a million workers took part in the scheme. But we should be prepared to borrow and spend much more than that if necessary.

The scheme has parallels with the Danish response to the virus, where employers are able to grant a paid leave of absence to their workers. The government will pick up 75% of their salaries, with the employer paying the rest. At the same time, workers agree to give up entitlements to paid holiday. 

Startups that are not yet bringing in revenue will need targeted support as they approach the end of their funding runways. They are ill-suited to taking on debt, such as the Business Interruption Loans, and are unlikely to benefit from rates relief or grants, as many use co-working spaces. Startups will be responsible for a large proportion of job growth once this is over, and cannot be overlooked.

Two measures should be targeted at them. First, grants aimed at small businesses that don’t pay rates should be extended to startups in co-working spaces. In lieu of accurate valuations, grants could be limited to at startups with fewer than 10 employees. Second, instead of loans the British Business Bank should back convertible notes of up to £500k for early-stage startups. The notes would convert to equity at a later date and avoid the problems of issuing loans for pre-revenue innovative businesses. 

Protecting incomes and jobs

It is important to target businesses as well as individuals. The aim is not just to protect incomes but to ensure workers have a job to go back to. 

A temporary basic income wouldn’t do this and would cost more. It would also be poorly targeted – many workers do not need support and transfers to them create additional tax burden in the future that need to be paid back, and that should be avoided if there are alternatives that can be better-targeted.  

However, means-testing is difficult at the best of times, and impossible in this kind of circumstance. A ‘third way’ might be to, effectively, open the student loans scheme to any UK worker that wants to access it, allowing them to borrow money now to be paid back on an income-contingent basis over their lives. Under the current student loan repayment terms, earnings above a certain income threshold (currently £25,716/year) are taxed at 9% to repay the loan, with any amount unpaid written off thirty years after the loan was first taken out. The loan incurs an interest rate equal to a measure of inflation (RPI) plus 3%. We could offer different plan terms to people availing of this scheme, cap the amount at a realistic level to reflect average earnings, and the repayment term to a short period of, say, five years.  

Low earners would probably never pay back the entirety of the ‘loan’ – since this is a one-off cost, that simply transfers lost income to them from other taxpayers, and it is arguably a feature of this scheme, not a bug. Most other people, depending on their earnings and terms decided on by the government, would pay back as and when they were able to. 

The advantage of an approach like this is that it allows people to self-select into the scheme, eliminating any need for the state to try to decide who is and is not deserving of cash now. The difficulty may be setting this up quickly enough for it to work in time to help people who need cash now. It may also be worth calling this something other than ‘debt’ to avoid putting off people who may misinterpret it as being akin to credit card-type debt – saying that people can access grants in exchange for a temporarily higher National Insurance rate for five years, for example.

Not all workers are employees. Five-million are self-employed. Many will have seen work dry up as their customers cancel commissions. In the case of cleaners, carers, and tradespeople, they must choose between putting themselves at risk of contracting the virus or losing their income. There should be targeted support to help this group. Norway has pledged to the self-employed 80% of their average income of the past three years. We should look to do something similar, capped at a level to avoid large payments to the high-earners. Alternatively, we could temporarily remove the minimum earnings limit to Universal Credit and increase payments.

Some people will lose their jobs. They should be protected through boosts to Universal Credit (UC), with payments coming sooner and work conditionality and sanctions temporarily abandoned. The normal trade-offs of welfare policy do not apply here. We should be relaxed about the welfare system discouraging job-hunting during the shutdown period. 

Still, some job changes are desirable. In the next six months, some sectors will need more workers. In the US, Amazon is hiring 100,000 extra workers to meet demand for home-delivery of food. In the UK, Morrisons and the Co-Op  are hiring 3,500 and 5,000 new staff respectively. Other delivery companies, the NHS and the social care sector will likely need more staff too. We don’t want to impede this. So work must pay, by making sure workers on UC do not face too high a withdrawal rate as they start to earn.

All of this assumes the shutdown is temporary over three to six months - if it turns out not to be, an extremely costly and painful reallocation of resources will be needed. But the objective of the shutdown, we hope, is to put in place measures that allow us to contain the virus with testing and local quarantines, and eventually develop a vaccine or cure. 

Getting there over the next few months will be very difficult. The success of the Government’s economic response will be judged on lives saved and our ability to go back to normal as soon as possible. The measures advocated above are radical, and should be temporary. A policy package designed to weather a once in a century pandemic isn’t a policy package suited for the recovery, and vice versa. To act as if the normal rules apply right now is worse than delusional – it is dangerous.

Innovators vs. The Virus

From the moment the pandemic started to spread, people with an inventive turn of mind have been applying themselves to the problem of identifying, preventing, and treating the novel coronavirus. Here are just a few of their efforts and the challenges they face.

Testing

Seegene, a South Korean company, began work on creating a test for the virus before it had even spread beyond China. It used artificial intelligence to rapidly identify the chemicals needed for the test – a thought-saving invention that allowed them to complete the process in just a matter of days, rather than the usual months. The test was ready and approved by the authorities within a matter of weeks. And due to South Korea’s widespread use of robots, the tests themselves can be undertaken extremely rapidly. Robotic arms test 94 patient samples at once, returning results in only 4 hours – significantly faster and less prone to error than doing so by hand. As a result, the country has conducted over a quarter of a million tests for the virus – almost five times as many as the UK, despite having similarly sized populations. South Korea continues to test as many people as possible, while the UK has apparently scaled back its testing of mild cases, presumably due to a lack of testing capacity. In the US, due to a severe lack of testing kits, some biologists in San Francisco have organised a volunteer effort to manufacture them.

Preventing

Teams of scientists all over the world are currently testing potential vaccines for the virus, at least one of which will hopefully bear results. The Kaiser Permanente Washington Health Research Institute, in Seattle, has just begun a 6-week trial of a prospective vaccine, mRNA-1273, in healthy adult volunteers. It has shown promising results in animals, but the human test will be the clincher. This is not just a matter of determining its effectiveness and safety, but about working out the most effective dosage – those brave volunteers, for example, are testing doses of 25, 100, and 250 micrograms. Likewise, scientists at Russia’s Vector Institute have begun vaccine tests in animals, and researchers at China’s Academy of Military Sciences are beginning human trials too. Israel’s Institute for Biological Research is also about to begin its own trials.

Even if the trials are successful, however, getting vaccines to the world’s population will take a lot more ingenuity. Successful ones will need to be produced at great scale, and with great care. 

Treating

Despite the extraordinary rapidity with which vaccines have been able to get from the lab into human patients - largely thanks to advances in artificial intelligence and genome sequencing - having one that works and is available to everyone who needs it will take a matter of months.

In the meantime, the sheer number of cases worldwide has given us the opportunity to learn more about how to treat the virus. Initial reports have suggested that a few already-existing antiviral drugs may be effective against it. Yet these experiments still need to be replicated and confirmed. One of the top candidates is remdesivir, which was apparently successful when used to treat the US’s first patient. The drug now needs to be properly compared with placebos, though fortunately its general safety for humans is already well-established. It had already been tested as a candidate for treating ebola and MERS. Remdesivir is now the subject of a few randomised controlled trials, some of which should be reporting soon, and the manufacturer is already ramping up production just in case.

Chinese officials have also reported success using favipiravir, after trialling it in hundreds of patients, though Japanese trials (it is a Japanese-made drug) so far suggest it only works in milder cases and there are concerns there about potentially serious side-effects. Physicians in various countries have also reported success with drugs like Kaletra (a combination of lopinavir and ritonavir), typically used to treat HIV, as well as chloroquine, which has been used to treat malaria for decades (as well as a variant, hydroxochloroquine). As with remdesivir, however, we’re still waiting for their efficacy to be fully confirmed in randomised controlled trials.

Should none of these candidates prove effective, there are also a host of other organisations developing drugs from scratch. We can expect many of them to be tested in humans over the coming months, particularly as the authorities have become far more willing than usual to approve such tests.

Apart from the chemicals, the treatment of coronavirus has physical challenges. There is a widespread concern that many countries lack sufficient respirators to provide oxygen to those patients who have severe cases of the disease. There are so few ventilators in the UK, for example, that we would have to “flatten the curve” to impossibly low levels unless there is a dramatic increase in ventilator capacity. In Italy, this has already become a severe issue, though some inventors have stepped in to fill gaps in the supply chain. When a hospital in Brescia desperately needed new valves for its machines, and the manufacturer was unable to supply replacements, they turned to a number of local 3D-printing companies to manufacture the part - despite the fact that the manufacturer apparently refused to share blueprints and threatened the 3D-printing companies with legal action for patent infringement. Similarly, some people have begun sharing open-source designs for ventilator parts on Facebook.

There are, however, legitimate concerns about the safety standards for manufacturing ventilators. Even small mistakes can be life-threatening, and defective ventilators may in some cases be worse than no ventilator at all. To resolve this, the UK government has successfully persuaded large manufacturers to switch production to ventilators, and has a screening process in place to ensure that the new ventilators and their components are provided by manufacturers with sufficient experience of compiling to existing safety regulations.

Similarly, although there have been severe shortages of hand sanitiser due to stockpiling, some entrepreneurs have begun to step into the gap. A few Scottish whisky distilleries and London gin-makers have shifted production into manufacturing the stuff, though the government may need to look at whether alcohol duties should be altered to enable them to carry this on without incurring major losses. Perfume makers in France, too, have shifted to making the gels.

For those people treating the virus at home, there has also been some research into what works best, though without the rigour of proper randomised controlled trials - at least not yet. There have been rumours that ibuprofen and similar non-steroidal anti-inflammatory drugs have worsened the disease in some patients, and while many of these rumours seem to be unfounded, some health authorities have recommended that paracetamol be used as a preferred painkiller just in case (while urging people not to stop taking ibuprofen if they were already doing so under doctor’s orders). A team at the Spiez Laboratory in Switzerland has also reported that taking echinacea extract might have been somewhat preventative of similar diseases like SARS and MERS, raising hope that it might have the same effect for the coronavirus. But such work has been announced so recently that it has not yet even been peer-reviewed.

Dealing

Although governments are beginning to assemble bailout packages for the most severely affected businesses, like restaurants and cafés, some inventors are helping people direct money to their favourite places, to help them through the difficult next few months. Crowdfunder.co.uk, for example, with support from Enterprise Nation, have allowed the use of their platform for supporting affected UK businesses entirely for free. Likewise, in San Francisco, married couple Kaitlyn Trigger and Mike Krieger spent a weekend setting up SaveOurFaves, a platform for restaurants to be able to sell gift cards, getting some up-front cash to enable them to reopen when the crisis is over. Similar initiatives seem to be popping up all over the world.

When it comes to supporting the vulnerable, too, a number of apps have been developed seemingly overnight, to link up healthy people with those who may need deliveries of essential supplies while they are self-isolating. We at the Entrepreneurs Network, for example, have partnered with a scheme covering London, called Dare to Care Packages.

As for shortages of items like toilet paper, apparently due to stockpiling, I’ve yet to see much in the way of innovative solutions. In the meantime, however, do not use kitchen roll or wet wipes as direct substitutes, as flushing them down the toilet will utterly wreck the country’s sewage system.

As social-distancing measures ramp up and schools and other childcare providers close, companies like Bubble in the UK are supporting hospital staff and other key workers to find vetted babysitters while they go to work (though the government should probably look at adapting its tax-free childcare policy to such solutions, as the system is not yet set up to account for digital platforms).

Next time

The pandemic has brought attention to a number of others organisations that may help us deal with future cases. Nextstrain, for example, uses open genomic data to aid our understanding of this outbreaks and other ones, tracking coronaviruses, flus, and other strains as they evolve.

Even when the worst of this particular crisis is over, the world’s businesses and governments must step up their support for research into general vaccines and treatments for future pandemic-capable strains. This has been a devastating, deadly wake-up call. It must never happen again.