Page 2 - G20 Newsletter_Vol17

in which KfW Capital and the European Investment Fund have development investments. This represents a liquidity injection
already invested as well as new VC funds. of $1.6 billion (€1.5 billion).

(2) The second pillar is aimed towards start-ups and SMEs that Fourth, Bpifrance is speeding up public support payments.
do not have access to the Corona Matching Facility. This aim It is going to transfer $270 million (€250 million) ahead of
is to be achieved by establishing closer cooperation between schedule.
start-ups, SMEs, with the German federal states. Therefore,
On April 17th, the Canadian federal government revealed
state companies and state development institutions shall
plans to make an additional $250 million available through
develop more intimate collaboration with these companies
the existing Industrial Research Assistance Program (IRAP)
to allow for VC capital and other forms of funding. The risk is
program, which provides advice, connections, and funding
split between the Federal Government and the respective state
to Canadian small and medium-sized businesses. Trudeau
company involved and, if applicable, private investors.
said the measures are meant to address gaps left by the
France’s Minister of State for Digital Affairs Cédric O and federal emergency loan programs and the wage subsidies.
public investment bank Bpifrance announced a comprehensive The additional capital is being committed after calls from the
support plan for start-ups on March 25th, 2020. Some French Canadian innovation sector lamenting that existing federal
start-ups are going to face revenue issues as well as funding emergency programs have not been inclusive of start-ups.
issues in the coming months. The French government wants
The UK government announced on April 20th, 2020, that UK
to bridge that gap with refinancing and liquidity measures
businesses driving innovation and development would be
temporarily— overall, it represents $4.3 billion (€4 billion).
helped through the coronavirus outbreak with a £1.25 billion
The French government has already announced a government support package. The £500 million Future Fund
comprehensive economic support plan. French companies that has been designed to ensure high-growth companies across
are facing revenue issues can skip tax payments as well as the UK receive the investment they need to continue during
rent and utility bills. The French government is mobilizing $320 the crisis. Delivered in partnership with the British Business
billion (€300 billion) in liquidity support, which should make it Bank and launching in May, the fund will provide UK-based
much easier to get a loan as the government is backing loans. companies with between £125,000 and £5 million from the
And yet, start-ups are always on the verge of bankruptcy. government, with private investors at least matching the
That’s why the French government is going one step further government commitment. These loans will automatically
with a startup-focused support plan with additional measures. convert into equity on the company’s next qualifying funding
round or at the end of the loan if they are not repaid. A
First, start-ups that were in the process of raising a new
business must be an unlisted UK registered company that has
funding round will be able to raise a bridge round through
previously raised at least £250,000 in equity investment from
Bpifrance’s PIA (Plan d'Investissements d'Avenir). Some VC
third-party investors in the last five years to be eligible. The
firms might retract term sheets; others might slow down
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government is committing an initial £250 million in funding
their investment pace. Bpifrance is putting $86.7 million (€80
towards the scheme, which will initially be open until the end
million) on the table. Private investors will co-invest as much
of September. The scale of the fund will be reviewed.
as $86.7 million (€80 million) as well.
In a bid to strengthen its position in the global start-up
Second, the government is detailing liquidity support
ecosystem, the Indian Department for Promotion of Industry
measures for start-ups. Just like other companies, they can
and Internal Trade (DPIIT) is working on a National Seed Fund
borrow money as part of the $320 billion (€300 billion) liquidity
and a credit guarantee scheme in an advanced stage for the
scheme. For start-ups, they can borrow as much as two years
Cabinet nod. The National Seed Fund seeks to support ideation
of payroll for employees based in France or 25% of annual
and development of early-stage start-ups while the credit
revenue — whichever is higher. This should account for $2.2
guarantee scheme will enable start-ups to raise loans easier.
billion (€2 billion).
The schemes are said to be part of the country’s broader
Third, start-ups can get tax returns more quickly, and in roadmap for start-ups, and the overall vision for the sector will
particular, VAT returns and tax returns on research and detail the priority areas that need support.