Europe scrambles to rescue struggling tech startups

Governments across Europe are in a race to save technology startups as the sector braces for a huge economic hit as a result of the coronavirus pandemic.

With most businesses set to furlough staff and even suspend operations due to lockdowns, many up and coming firms could potentially go bust.

There are also concerns that some firms will struggle to interest panicked venture capitalists, leading to a sudden downturn in a sector usually associated with rapid growth.

The French government, led by Emanual Macron, has already launched a massive €4 billion (£3.5 bn) liquidity plan to support its startup ecosystem. This included short-term refinancing, investment into pre-planned funding rounds and also early tax credit payments.

The German government has also announced a startup support package, announcing €2 billion to keep its fledgeling tech firms afloat. There are also reports that the government is considering a longer-term package of €10 billion for larger companies.

Pressure is now growing on the UK to follow suit and protect one of the biggest contributors to its economy. On Monday, Tech London Advocates (TLA) founder Russ Shaw urged Boris Johnson's government to include loss-making firms in its £330 billion loan scheme to protect the tech sector as a whole.

Chancellor Rishi Sunak announced a support package for businesses to keep them afloat during a lockdown, but UK firms need to show at least three years of profitability, a position that's unlikely for most startups.

The disparity in support packages between European member states has created some concern for tech firms across the continent. Allied for Startups, a lobby group based in Brussels, is urging the European Commission to coordinate a relief program for startups across the bloc.

"Fundamentally we think a start-up shouldn't be at a disadvantage because it is in Spain and not in France," its director of EU policy, Benedikt Blomeyer, said according to CNBC.