As the COVID-19 virus spreads across the world creating health and economic concerns, many governments are working hard to ensure the economic impact is lessened. It is in this light that France’s Minister of State for Digital Affairs Cédric O and public investment bank Bpifrance announced a comprehensive support plan for startups this morning. Just like other businesses, startups are greatly affected and will face greater funding and expansion difficulties in the aftermath of the pandemic. Hence, this is a timely move by the French government to ensure their startups survive.
“Startups represent a growing part the economy — especially when it comes to jobs,” Cédric O said in a statement. “They are also working on innovative products and services that have been particularly useful during the lockdown, such as telemedicine appointments, remote work solutions or deliveries.”
These moves are not only limited to startups as France has already announced a widespread economic support plan. Consequently, French companies that are facing revenue issues can skip tax payments as well as rent and utility bills. The French government is mobilizing $320 billion (€300 billion) in liquidity support, which should make it much easier to get a loan as a company, and equally government backed loans.
Some of the benefits of this include the fact that, startups that were in the process of raising a new funding round will be able to raise a bridge round through Bpifrance’s PIA (Programme d’Investissements d’Avenir). Some VC firms might retract term sheets, others might slow down their investment pace. Bpifrance is putting $86.7 million (€80 million) on the table. Private investors will co-invest as much as $86.7 million (€80 million) as well.
Also, the government is detailing liquidity support measures for startups. Just like other companies, they can borrow money as part of the $320 billion (€300 billion) liquidity scheme. For startups, they can borrow as much as two years of payroll for employees based in France or 25% of annual revenue — whichever is higher. This should represent $2.2 billion (€2 billion).
Equally, startups can get tax returns more quickly, and in particular VAT returns and tax returns on research and development investments (crédit d’impôt recherche). This represents a liquidity injection of $1.6 billion (€1.5 billion). In all, Bpifrance is speeding up public support payments. It is going to transfer $270 million (€250 million) ahead of schedule to ensure that timelines are met.