The government’s £500 million Future Fund opens for applications today (Wednesday 20 May) with innovative and high-growth British businesses able to secure investment to help them through the Coronavirus outbreak. Many companies turned their back on it weeks ago, what does the industry think about today’s launch.
Luke Lang, co-founder of Crowdcube commented: “Many entrepreneurs turned their back on the Future Fund weeks ago and got on with existing fundraising plans; the Government’s new guidance on the Future Fund has proven them right. Sacrificing EIS tax relief and having to apply on behalf of a company will be a step too far for most private investors, making the scheme unsuitable for the majority of businesses.
At Crowdcube, we’ve helped 42 businesses raise over £21 million from 32,000 investors since the lockdown started, as entrepreneurs successfully turn to their communities for funding.”
Adam Dodds, CEO and Founder of Freetrade commented: “The Future Fund will not help most early-stage startups, entrepreneurs or private investors. The program seems designed to support venture capitalists and will give them ample opportunity to take advantage of start-ups in desperate need of funding. Instead of acting in the public interest as it’s supposed to do, the treasury is taking steps that primarily benefit the industry with the strongest influence and lobbying power.”
Alastair Lukies CBE, CEO Pollinate & Chairman, Fintech-Alliance commented: “Today’s launch of the Future Fund is a welcome initiative from the Government, designed to support UK growth companies by enabling extended financial runway. The U.K. has made huge strides in the ‘Fusion Industries’ such as Fintech, MedTech, GovTech and EDTech amongst others, and the Future Fund, together with additional support for R&D, demonstrates how far we have come societally in understanding the different types of business in the ecosystem.
It is clear there are a large number of high quality, fast growth businesses that are not eligible for support through the Coronavirus Business Interruption Loan Scheme as they do not have a long term track record, but have conceived and developed great IP that needs to be scaled and sold around the world. These businesses will be key drivers of both economic growth and job creation in the UK going forward, and the Fund will help provide short term support for long term gain at this critical juncture.”
Key features of the Future fund.
- 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, Rishi Sunak, 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.”
The government will 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.