UK-based companies can now apply for a convertible loan of
between £125,000 and £5 million, to support continued
growth and innovation in sectors as diverse as technology,
life sciences and the creative industries.
The government has made an initial £250 million available
for investment through the scheme and will consider
increasing this if needed.
Private investors – potentially including venture capital
funds, angel investors and those backed by regional funds -
will at least match the government investment in these
companies.
The Chancellor of the Exchequer, , said:
Our start-ups and innovative firms are one of our great
economic strengths, and they will help spur our recovery
from the pandemic.
The Future Fund will support firms across the UK to get
through the pandemic by stimulating investment, so that
they can continue to break new ground in technology and
innovation.
Match fund investors will be encouraged to sign the
Treasury’s Investing in Women Code, which commits firms to
improving female entrepreneurs’ access to tools, resources
and finance. The Future Fund is a signatory of this.
The government will also amend the rules of the Enterprise
Investment Scheme, which provides tax relief to investors
in high growth firms, to protect Future Fund investors from
losing relief on their previous investments made prior to
any investment through the Future Fund.
The Fund will be open until September and is delivered in
partnership with the British Business Bank.
In addition to the Future Fund, Ministers have allocated
£40 million through the Fast Start Competition to drive
forward new technological advances, and to support
innovative start-ups, including a virtual-reality surgical
training simulator and an online farmers’ market platform.
This will give companies a vital boost, fast-tracking the
development of innovations borne out of the coronavirus
crisis.
Latest figures on the UK-wide government support schemes
for businesses and workers can be found here.
Secretary of State
for Digital, Culture, Media and Sport said:
The UK is a global tech and creative hub. We are an
unashamedly pro-tech government and are supporting
high-growth businesses through this challenging period so
they can prosper and succeed.
The tech sector has played a crucial role throughout the
pandemic and these innovative firms will be key to
driving growth through our recovery.
Business Secretary said:
“Britain is an innovation powerhouse and helping our
cutting-edge companies of the future get the cash they need
during this difficult time is a vital part of getting the
UK economy up and running again.”
Notes
- The Future Fund is open to UK-based firms, that have
previously raised at least £250,000 in equity investment
from third parties in the last 5 years. They will also need
to have investors to provide funding to be matched by the
government, and have half or more of their employees based
in the UK or generate at least half of their revenue
through UK sales. The loans will convert to equity if not
repaid.
- Companies can check they meet the criteria for funding
by going to the British Business Bank website. If they have
secured private match funding, one of their investors can
register online to start the application process.
Responses from business groups and industry
, Director General
of the British Private Equity and Venture Capital
Association (BVCA) said:
The Future Fund is hugely significant and very welcome.
For many venture capital-backed businesses it will build
the bridge from today’s severe challenges to the period
of recovery, enabling them to survive then thrive.
The post-COVID economy is likely to look very different
to today’s. The global leadership of venture
capital-backed companies in the digital, high technology
and life science parts of the UK economy will be critical
to the UK’s success and this government support will help
them to do that.
We anticipate strong demand for this funding and we will
continue to work with the government to ensure that there
is enough to achieve the objective of sustaining this
strategically-important sector.
Charlotte Crosswell, CEO of Innovate Finance, commented:
The Future Fund is a welcome step to support our start-up
and scale-up economy, and a much-needed intervention from
government to back high-growth businesses. Many FinTech
companies have been unable to access the other loan
schemes available, so this will provide vital funds to
firms in the sector.
The UK has a reputation as a global FinTech leader and we
must make sure this remains the case. We have seen some
incredible transformation of financial services from the
FinTech sector over the last decade and it will play a
key role in our country’s economic recovery. In addition,
the opportunity to export more of these products and
services to overseas markets will showcase the unique
innovation the UK has built and the role Fintech can
play.
David, CEO of TechUK
commented:
The Future Fund is a strong statement of intent from the
UK Government on the value of innovative companies and
their importance, not only now, but for the strategic
interests of the UK’s economic future.
I’m pleased to see that the government has worked to
expand the scope of the scheme to make it more inclusive
and accessible. It is crucial that as we rebuild our
economy and look to the future, we ensure everyone is
able to benefit equally. techUK will continue to work
with government, our members and the tech community to
ensure we build a future ready for what comes next.
Gerard Grech, CEO of Tech Nation said:
We are delighted to see that the Future Fund is now open
for applications and are grateful for HMT’s work over the
past few weeks to ensure that as many businesses as
possible can access the liquidity they need. This is an
important step to provide investment to pre-profit,
pre-revenue businesses with a cash injection to get them
through these challenging times.
Irene Graham, CEO of the ScaleUp Institute said:
The Future Fund is an important initiative and takes us
another step forward in meeting the needs of the UK’s
scaleups at this time, who employ 3.5m people across all
industry sectors and regions. We welcome the streamlined
and investor-led process which will enable swift
execution, getting money out as quickly as possible
across the country. This is part of a suite of financial
solutions needed for scaleups and we welcome the fact the
government will continue to keep it under review as its
take up develops.
Jenny Tooth OBE, CEO of UK Business Angels Association
(UKBAA) said:
UK Business Angels Association congratulates the
Government for bringing this important initiative so
rapidly into the market. The Future Fund responds to the
needs of innovating growth focused businesses that may
have had investment from angel investors in their early
growth stages and now have the capability to benefit from
the support of a Convertible Loan alongside VC
investment. This will bring vital further finance to
enable them to address the impact of the Covid 19 crisis
and ensure their continuing ability to build and scale
their business.
We recognise that many equity backed small businesses
right across the UK are developing vital innovative
products and services and that have the capacity to help
the growth of our economy in the months ahead as we
emerge into economic recovery. Yet many of these
businesses need further support and investment to
withstand the impact of the Covid-19 crisis to ensure
that they can survive and successfully continue to build
and commercialise their innovations. UKBAA acknowledges
the importance of the new Future Fund offering a vital
new £250 million of support through a Convertible Loan
Note, alongside matching VC or other relevant third party
investors to enable these innovating businesses to
successfully survive and lay the foundations for further
significant growth.
Erin Platts, Head of EMEA and President of the UK Branch,
Silicon Valley Bank said:
We see the Future Fund as a very positive step in
supporting the UK’s Innovation Economy. It is great news
that the Fund has moved swiftly to implementation and
from today innovation companies and their investors will
be able to apply to access the funds they need to help
them through this period and support their growth plans.
The Future Fund is one way to protect the UK’s thriving
innovation and life sciences industries to help maintain
our place as one of the most attractive and successful
tech hubs globally. The Future Fund will provide valuable
investment to extend runway for UK start-ups and
scale-ups, allowing them to continue to operate, preserve
and create jobs and build the technologies of the next
decade and beyond. We are also pleased to see inclusion
and diversity efforts being front of mind as part of the
fund’s process, something we greatly welcome and support.
We will continue to assist and partner with UK innovation
companies and their investors through this initiative and
other government programmes.
