Legal start-ups miss out on Â£1.25bn support package
The Law Society has voiced concerns over whether the government’s £1.25bn covid-19 support fund excludes crucial legal businesses
The Law Society has voiced concerns over whether the government’s £1.25bn covid-19 fund to support firms driving innovation may exclude crucial international and start-up legal businesses.
The scheme includes a £500m loan scheme for high-growth firms, called the Future Fund, and £750m of targeted support for small and medium sized businesses focusing on research and development.
Simon Davis, president of the Law Society said: “Our sectoral analysis found that the adoption of new technologies is set to double productivity growth across the sector.
“The new eligibility information provides clarity that legal technology innovators are welcome to apply, however, it is positioned to focus on scale-ups rather than start-ups, locking out angel investors and prioritising Venture Capitalist funds.
“Firms in international accelerator programmes, meanwhile, will be excluded from the fund as companies are required to create a parent company in the country holding the programme.
“With technological innovation set to play an essential role in our post-Covid recovery, the government should seek to support dynamic and innovative firms of all shapes and sizes.”
The £500m Future Fund is focused on ensuring high-growth companies across the UK receive investment to continue weather the covid-19 storm.
It is delivered in partnership with the British Business Bank and will provide UK-based companies with between £125,000 and £5m from the government, with private investors at least matching the government commitment.
The loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.
To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third party investors in the last five years.
The £750m of targeted support for R&D-intensive small and medium size firms is being made available through Innovate UK’s grants and loan scheme.
It will accelerate up to £200m of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550m will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding.
The Law Society has called for the eligibility criteria to be open to all innovators in legal technology – a market it values at £15.9bn globally.