Chancellor Rishi Sunak has launched a £250m Future Fund for tech start-ups
BREAKING: The government has announced its £250m Future Fund tech start-up bailout scheme to help innovative companies get through the coronavirus pandemic.
The widely anticipated Future Fund will issue convertible loans between £125,000 to £5m to innovative companies that are facing financing difficulties due to the Covid-19 outbreak. These loans will have to be matched by private investors.
>See also: Government eyes taking equity stakes in tech start-ups
These loans will be for three years and will be charged at an interest rate of 8 per cent.
Crucially, the government could end up owning half of some of Britain’s fastest-growing tech businesses. Future Fund loans may convert to equity at a discount of at least 20 per cent when companies undergo their next funding round.
This scheme will launch in May 2020, which may be too late for some start-ups reliant on investors to survive. Investment through government tax schemes such as the Enterprise Investment Scheme has dropped by 70 per cent this year.
Chancellor Rishi Sunak has charged British Business Bank with delivering the Future Fund.
Gerard Grech, chief executive of Tech Nation, said: “Tech startups and scaleups are crucial to the UK’s future growth, jobs and innovation. The £500m Future Fund and £750m for loans and grants for R&D for startups is a bold intervention, and although the full implementation details are to still be released, it is likely to give the sector a welcome boost in these unprecedented times. How to target the money effectively should be the next priority.
Who can apply for the Future Fund:
A start-up is eligible for the Future Fund providing:
- your business is based in the UK
- your business can attract the equivalent match funding from third party private investors and institutions
- your business has previously raised at least £250,000 in equity investment from third party investors in the last five years
Full eligibility criteria will be published in due course.
How to apply for Future Fund
The Future Fund will launch in May and will run until September 2020. Further details about this scheme will be published in due course.
Further reading
Tech companies call for emergency loans to be opened up to them
