The Chancellor of the Exchequer today announced that the Future Fund is being expanded to accommodate businesses that contribute significantly to the UK economy, but do not have their parent company based in the UK because they participated in a non-UK based accelerator programme.
Accelerators are open and competitive programmes which are designed to select and foster the stars of tomorrow. They are selective, have a fixed-term and are a cohort-based programme for early stage companies, offering access to industry mentorship, seed or venture capital and other professional support.
Part of the conditions of joining some accelerator programmes outside of the UK is that the businesses are required to create a non-UK incorporated parent company.
These changes to eligibility will allow a wider number of suitable companies to apply, while maintaining scheme protections against fraud and abuse and ensuring that the Future Fund continues to support economic activity in the UK.
A non-UK ultimate parent company of a corporate group which participated in an Accelerator Programme on or before 19 April 2020 may be eligible for the Future Fund, provided that the company has satisfied the following:
• the Company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive);
• if the Company is a member of a corporate group, it must be the ultimate parent company;
• the Company is the equivalent of a UK limited company in the relevant non-UK jurisdiction;
• the Company does not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue
• it participated in an Accelerator Programme, on or before 19 April 2020, and participation in the Accelerator mandated incorporation of the ultimate parent company in a non-UK jurisdiction;
• if the Group (or any entity within the Group) was in existence before the Company was incorporated, the ultimate parent company of the Group (or the sole entity, if applicable) must have been incorporated in the UK;
• the Company is the ultimate parent company of a Group which has:
− half or more of its employees based in the UK; or
− half or more of its revenues from UK sales;
• it is the ultimate parent company of a group which contains at least one subsidiary operating company incorporated in the UK on or before 31 December 2019; and
• the Company received investment from the Accelerator Programme on or before 19 April 2020.
The Future Fund, which was developed by government and delivered by the British Business Bank launched in May and will initially be open until the end of September. As at 28 June, the Future Fund has approved over £320.6m of convertible loans to 322 innovative businesses across the UK.
Operating on a commercial basis, the Future Fund unlocks additional third-party investment on a match funded basis, creating a bridge to the next equity funding round for innovative companies with good potential.
Initially, £250 million was made available by the government for investment through the scheme, to be matched by private investors, with the Treasury making clear the amount could be increased if needed. Due to the popularity of the Fund, more funding is being made available. The scale of the scheme will be kept under review.
This technical extension to the Future Fund may mean that for these new companies applying, the assessment of an application involving a non-UK parent company may take additional time to complete due to the need to assess and review documentation received, additional checks that may need to be undertaken and the need to assess information from parties in other jurisdictions.