The U.K. tech lobby is reasserting the need to help EU startups with funding as venture capital money dries up in the wake of the coronavirus pandemic.
A coalition of startup groups sent a joint letter to Ursula von der Leyen, president of the European Commission, on Friday (April 3) asking that startups get a “central role in your solutions to the COVID-19 outbreak.”
Led by the Brussels-based Allied for Startups, the letter warns that the continued economic fallout triggered by the pandemic will put the brakes on the fast-growing tech sector. As sales evaporate many startup founders have said that they are already seeing financing rounds pulled or vastly reduced.
“As with preceding disasters, this crisis is also an opportunity for innovation,” the letter said. “When looking for solutions to combat and resolve the COVID-19 outbreak, but also when looking at where growth opportunities are coming from after the economic downturn, startups are the key actors in both equations.”
The letter points out startups have less liquidity since resources are reinvested for new growth and expanded markets. It asks that the EU fast-track funds to startups working on the pandemic, extend tax deadlines and help fund investment deals in the works.
“We hope that you will ensure that startup communities will not be left alone,” the letter said.
Venture capital deals in the top 10 European countries have dropped almost 50 percent to 692 in the first quarter this year, according to Pitchbook, a CNBC report indicates. Last year in the same time period new VC deals were 1,363. VC funding last year took topped $30 billion.
France and Germany are both planning to help startups with emergency funding. U.K. Prime Minister Boris Johnson is also planning to follow suit.
Silicon Valley is also seeing deals temporarily halted with the uncertainty surrounding COVID-19. Private deals are facing interruptions due to new economic risks, while “shelter in place” limitations are rendering it impossible to assess startups face-to-face in the same physical setting.