What is the Future Fund?
The Future Fund was created to help UK startups struggling to deal with the financial impact of Covid-19. Most of these fledgling firms were not eligible for the standard business support schemes, they had no revenue and no trading history, nothing to say how much money they usually made before the pandemic (because, in many cases, they made no money).
So, the government agreed to provide convertible loans to eligible startups – loans that, if not paid back, would turn into a stake in the company.
To be eligible for the loans, companies had to be based in the UK (and either have at least half their employees in the UK or at least half their revenues from the UK), and meet the following two crucial criteria:
- They had to have raised at least £250,000 in equity investment from third-party investors in the last five years
- Any government investment had to be at least matched by funding from private investors
While these conditions arguably excluded true startups, they were perhaps understandable, applications had to be processed quickly and the private investment clauses were a handy way of ensuring that they money went to startups with a genuine chance of financial success.
Overall, £1.07bn of Future Fund investment has now been given to over 1,000 companies, with the loan amounts ranging from £125,000 to £5m.