Startups looking for initial funding are struggling, with first-time investment plummeting since lockdown began.

Startups raising money for the first time have been the hardest hit by the drop in venture capital funding, raising fears that the coronavirus pandemic will hold back a whole generation of tech entrepreneurs.

Funding for UK startups raising for the first time fell by 83% between 23 March and 17 May compared to the same period in 2019, according to new research by Plexal and Beauhurst.

In comparison, UK tech startups in general saw a 50% drop in overall funding year-on-year — showing early-stage companies are being disproportionately affected.

Speaking the week that the UK’s Future Fund is launched to help startups with over £250k in existing funding, Andrew Roughan, managing director of Plexal, called on the government to do more for first-time founders.

“We risk losing a generation of tech entrepreneurs at the earliest stages of their startup journey… By only backing companies that have already raised funds, investors are ignoring the very companies that will define the future success of the British economy,” said Roughan.

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