Whatever your political persuasion it's tough to criticise our politicians trying to respond in unprecedented circumstances.  War time analogies abound and the Queen even told us on Sunday that "We'll Meet Again" evoking Vera Lynn.  Against this backdrop the nation's entrepreneurs are desperately looking for ways to survive and then thrive. 

Much of the activity has been focussed on government intervention - which of course we'll all have to pay for one day!  What about the private sector and specifically investment?

Government action has focussed on grants, debt and time to pay taxes, alongside its "furlough" concept.  Not all of these apply to entrepreneurial high growth companies - many started very recently.  Not to worry as debt is apparently there for "good businesses" from Cybil - not Basil's wife from Fawlty Towers - the Corona virus business interruption loan scheme!

A good business - now there's an interesting concept. A good business is not an objective construct.  There will always be subjective analysis of what makes a good business. A good business for a bank might be one with assets that can provide security for lending and strong cashflow to repay borrowing.  A good business for an equity investor might be one with a game changing idea or invention that has limited security to offer and little cashflow. The latter being more suited to a higher reward for taking the risk of investing equity instead of an interest rate for debt.

So, this virus presents a real risk to entrepreneurialism.  If no-one invests and these entities don't qualify for loans from banks there is a big risk for our country as we emerge from the crisis. That risk is that we will lose great businesses that are re-inventing the future each day. 

Investors look at risk and reward.  In doing so the government could intervene now to remove risk and enhance reward.  By offering tax breaks for those willing to back what the government calls "good businesses" we can encourage investors to back them too.  This article from Jasper Smith makes the compelling case for putting private investors money to work and rewarding them for taking the risk.  Tax relief of EIS is available (detailed rules apply) of up to 30% on an investment.  Jasper suggests a move to 80%.  I'm no economist (obviously) but there must be an investment elasticity of demand point (my 'A' Level Business Studies teacher from 1986 will be chuffed at that label).  I mean a point at which tax incentives tip the risk / reward scale to make investing attractive.  What about 75% for investments made before 4 April 2021, 50% to 4 April 2022 and back to 30% thereafter?

So the risk / reward equation for us all must make it worth considering other ways to support and stimulate our economy - not just the blunt instrument of debt administered by banks.