More than 1,000 of the UK’s high-growth businesses have filed for administration, liquidation or dissolution since lockdown began, according to new research released today by Plexal and Beauhurst.
During this period, September brought a record number of filings — the highest monthly figure in 10 years – as the full impact of COVID-19 started to be revealed. 273 fast-growth companies filed for administration, liquidation or dissolution in that month alone, out of a total of 1,067 since the beginning of lockdown. That’s a 181% month-on-month increase compared with August.
While government schemes provided “valuable support to cash-strapped early stage companies struggling from the COVID-19 crisis,” said the researchers, “the sharp rise in startup deaths highlights the fading preservative effect of government support schemes.”
“Government initiatives alone are not sufficient to support startups most in need of funding and cash flow in the current economic climate,” said Andrew Roughan, managing director of Plexal. “It’s these businesses that will provide the innovation and jobs that will drive the UK’s economic recovery, and they need our urgent support.”
Earlier this year, the UK government announced a £1.25bn ($1.53bn) package of support for startups and tech businesses struggling as a result of the COVID-19 pandemic.
READ MORE: Coronavirus: UK startups get £1.25bn COVID-19 support from government
A new £500m investment fund was set aside for high-growth startups, while £750m of grants and loans for startups doing research and development were also handed out.
The fund provides convertible debt to startups, so if they can’t pay it back, it turns into equity. To date, the government has lent over £720m to more than 700 startups.