Future Fund: A lifeline for innovative businesses – now open
The Future Fund was created to assist unlisted UK high-growth businesses and start-ups to raise funds. On 18 May 2020 the final terms of the fund were published by the British Business Bank who will manage the Future Fund.
The headline company eligibility and limited government corporate governance rights remain consistent with those published when the fund was first announced with some clarifications. To be eligible the company must:
- have raised at least £250,000 in equity from third-party investors between 1 April 2015 and 19 April 2020 inclusive; and
- if the company is a member of a group, be the ultimate parent company; and
- not be listed; and
- be a UK limited company incorporated on or before 31 December 2019;
- have 50% or more of its employees based in the UK OR generate 50% or more of its revenues from UK sales.
Matched funding must be provided by investors who fall within one of the following categories:
- an “investment professional” (as defined in article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“FPO”))
- a high net worth company, unincorporated associated or high value trust falling within article 49(2) of the FPO
- a “certified sophisticated investor” or a “self-certified sophisticated investor” within the meaning given in articles 50 and 50A respectively of the FPO
- a “certified high net worth individual” within the meaning of article 48 of the FPO
- an equivalent professional, high-net worth, institutional or sophisticated investor in accordance with applicable law and regulation in such investor’s home jurisdiction
- an association of high net-worth or sophisticated investors within the meaning of article 51 of the FPO
- capable of being classified as a “professional client” within the meaning given in the glossary to the FCA Rules
If there is more than one investor, there is a required investment of at least £12,500 from the lead investor of a group of investors but there is no minimum investment requirement for other investors.
Applications are made via an online portal (https://www.uk-futurefund.co.uk/s/InvestorRegistration) by the lead or sole investor. Once the application has been submitted the company will then have to verify that the information provided by the investor is correct and confirm that it is happy for the application to be submitted. Companies will also be required to nominate a solicitor and confirm that the solicitor is prepared to act and is able to receive and hold client funds although the fund also recommends companies take legal advice in order to understand the full implications of participating in the Future Fund.
Once an application is submitted through the portal, if successful, the platform will generate standard documentation for signing which cannot be negotiated (although it is possible to increase the interest rate above 8%) and the matched funding investors must all investor on the same terms as the Future Fund.
It is expected that it will take a minimum of 21 days from the initial application process to funding being awarded. It is highly likely that there will be huge demand outstripping supply and so funding will be dispensed on a first come first served basis.
This is clearly a very valuable initiative to support the most innovative of UK companies backed by venture capital. The venture capital team at Field Seymour Parkes is highly experienced in advising companies on venture capital equity fundraisings and convertible loan notes. Should you require assistance the group is headed by Penelope Garden who can be contacted at firstname.lastname@example.org or 07584 216 062.