After much debate, the UK government has unveiled a plan for a new “Future Fund”, where it has initially committed £250 million (approx €283 million) to the new funding to ensure the high-growth companies across the UK get enough investment to remain viable during this pandemic.
Here’re the rules!
However, to unlock the investment, a business must be an unlisted UK registered company that has raised at least £250,000 in aggregate from private third party investors in previous funding rounds in the last five years and have a substantive economic presence in the UK. Notably, if the company is a member of a corporate group, only the ultimate parent company, if the UK registered company, is eligible to receive the loan.
Open until September 2020
Under the “Future Fund” the UK government will invest between £125,000 and £5 million in qualifying startups through the British Business Bank. Furthermore, the Government will keep this amount under review, since there are chances to commit more in the future. The scheme will initially be open until the end of September 2020. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.
Secretary of State for Digital, Culture, Media, and Sport, Oliver Dowden, said:
“We are the tech and creative capital of Europe, and it’s crucial to maintain our place. This funding will protect high growth businesses and enable the unicorns of tomorrow to thrive so that tech is in pole position to drive our post COVID recovery.”
Till now it remains unclear how the British Business Bank and its investment partners will select which of the UK’s startups to invest. The fund will officially begin in May and companies can apply for it on the GOV.UK website.
Rishi Sunak, Chancellor of the Exchequer, said:
“Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths and will help power our growth out of the coronavirus crisis. This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”
Smaller R&D firms get grants and loans!
Apart from this, the UK government has also committed £750 million (approx €850 million) to smaller companies focused on research and development. The cash will be available through Innovate UK’s existing grants and loan scheme.
Innovate the UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. The first payments will be made by mid-May.
Alok Sharma, Business Secretary, said:
“The UK is a world leader in innovation and at this hugely challenging time, we know that young, fast-growing firms require tailored support to see them through. This wide-ranging package delivers important help that will protect some of the most dynamic sectors of our economy.”
Main image credits: Cubankite/Shutterstock
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