The Future Fund has launched and is open for applications enabling many companies that have been unable to access funds from other initiatives, including start-ups and early stage tech-based businesses.
If your company is UK-based and operating in technology, life sciences and the creative industries you can apply for a convertible loan of between £125,000 and £5m, to support continued growth and innovation. The government has made an initial £250m available for investment through the scheme until September and may well increase this if required.
The Future Fund is very much focussed on the development and creation of jobs and opportunities through innovation in the UK. For this reason, the applicant also needs to be able to demonstrate that 50% or more of its employees are UK based or generate a majority of its revenue through UK and must have been incorporated on or before 31 December 2019.
There have a been a few hurdles to jump for any of the grants and schemes during the pandemic and the main issue with this scheme is that to qualify, a business must have previously raised at least £250,000 in equity investment from third parties in the last five years. So in effect the Government funding will be matched by private investors, such as business angels, venture capital (VC) funds, or from sources such as regional funds.
The Enterprise Investment Scheme (EIS), which provides tax relief to investors is being amended to ensure that Future Fund investors don’t lose relief on their previous investments made prior to any investment through the Future Fund. Eligible start-ups will then repay the loans or convert them into equity after three years or on the next funding round.
The Future Fund is obtained through the British Business Bank and there is guidance for applicants, potential investors and specific advice on the legal aspects.