Apr 22, 2020
On 20 April 2020, Chancellor Rishi Sunak announced a new £1.25 billion coronavirus scheme to support some of the UK’s most innovative firms. The package comprises a £500 million Future Fund for high growth startups that have been affected by the pandemic and £750 million of grants for SMEs focusing on research and development. The announcement of the Future Fund comes after some of the country’s biggest scale-up brands, including Deliveroo and Citymapper, appealed to the government in an open letter to provide access to funding support measures to companies like theirs and other startups.
Launching in May this year, both measures are designed to help power UK growth by making sure that businesses in dynamic sectors such as technology and the sciences can continue to develop new products, services and solutions.
Delivered in partnership with the British Business Bank, qualifying companies will receive between £125,000 and £5 million of government funding – an amount that private investors will need to match or exceed. 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.
The government is initially pledging £250 million and the scale of the fund will be kept under review. It is currently set to run until the end of September 2020.
“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.” - Rishi Sunak, Chancellor of the Exchequer
The Future Fund loan scheme may be suitable for companies that are unable to access the Coronavirus Business Interruption Loan Scheme and rely on equity investment. The future fund is subject to at least equal match funding from private investors.
To qualify for the scheme, a business must:
Be an unlisted UK registered company
Have raised £250,000 (minimum) in equity investment from third party investors in the last five years
Have a substantive economic presence in the UK
The government has informed that full eligibility criteria, details of the fund operation and how to apply for the scheme will be published in due course. You can, however, read the Future Fund Headline Terms on gov.co.uk.
In addition to the Future Fund, the UK government is making £750 million of financial support available to “the most R&D intensive small and medium size firms.” Funding will be available via Innovate UK’s grants and loan scheme.
“Innovate 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.”
We’ll continue to update this article with new information as soon as it becomes available. In the meantime, visit our COVID-19 content hub for the latest information and business tips.
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