£250m fund which issues convertible loans to innovative UK companies with good potential, which typically rely on equity investment and are currently affected by Covid-19.
Due to the popularity of the Fund, more funding has being made available and the scheme has been extended until Sunday 31 January 2021.
The Future Fund will match up to 100% of the amount provided by investor(s), with loans ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.
Loans will have a minimum of 8% per annum (non-compounding) interest charge applied. This interest will be higher if the company and the investor(s) agree between themselves. Unlike a typical bank loan, the interest is not payable on a monthly basis and instead will accrue until the loan converts. At this point, the interest will either be repaid or convert in equity.
The loan will mature after 36 months and cannot be repaid early by the company other than with the agreement of all of the investors.
The loans will convert into shares in the company in certain circumstances, including an exit or a new funding round.
Investors and the Future Fund both invest using a convertible loan agreement, which is predefined and cannot be negotiated. The investor(s) must meet some specific criteria, details of which can be found via the British Business Bank website.
Companies must meet the following eligibility criteria:
- 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 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
- Company must be a UK incorporated limited company or be eligible to apply as a non-UK parent company (see specific eligibility criteria in the FAQs for non-UK parent companies via the British Business Bank website.)
- The company must have been incorporated on or before 31 December 2019 (or if you are a non-UK jurisdiction company, this criterion applies only to at least one UK subsidiary operating company)
- At least one of the following must be true for the company (if you are a non-UK jurisdiction company, this criterion applies to your group):
- Half or more employees are UK based
- Half or more revenues are from UK sales
If you are applying as a non-UK jurisdiction parent company, there are additional criteria to be met.
Visit the Future Fund portal via the British Business Bank website to apply.
The application process is investor-led. This means an investor, or lead investor of a group of investors, applies in connection with an eligible company.
- The investor, or lead investor of a group of investors, certifies they meet the scheme eligibility criteria and provides key investment details.
- The company confirms the accuracy of the investment application details provided, before submitting the full application.
- In the case of approved applications, all parties will execute an agreement (in the template form provided) and satisfy certain conditions set out in the agreement before the funds are released.
Further details are available via the British Business Bank website.