start-up business

The government has today (20 April 2020) announced that it will be providing support specifically targeted to innovative, fast-growth companies during the Coronavirus outbreak and follows similar schemes which have been launched both in Germany and France earlier this month.

The announcement will no doubt come as welcome news to start-up and scale-up businesses which have been deemed ineligible for the existing government support package for SMEs announced earlier this month. Despite being high-growth, these are often loss making during the investment stages.

The chancellor has announced two “streams” of support; the Future Fund aimed at already established businesses and additional funding via Innovate UK for R&D intensive SMEs.


1. Future Fund


What is the ‘Future Fund’?

  • £500m fund comprising £250m co-investment by the government, matched by a further 250m made available by private sector venture capital (British Business Bank);
  • Designed to ensure high-growth UK companies continue to receive investment during theCoronavirus outbreak;
  • The fund can provide a capital injection of between £125,000 to £5 million;
  • Capital injection is provided by way of a loan with the government’s contribution to be matched by private sector investment;
  • The loans may be in the form of convertible loan notes which automatically convert into equity (i.e. shares in the company) upon certain specified events or at the end of the loan period if they are not paid;
  • The Future Fund is due to launch in May and currently expected to be available until September 2020 subject to government review.


Who is eligible?

In order to be eligible for the Future Fund a business must;

  • Be an unlisted UK registered company e.g. a private company listed and active at Companies House;
  • Previously have raised at least £250,000 in equity investment (i.e. through the purchase of new shares in the company) over the last 5 years. This investment must have been made by third party investors.

The injection of capital by the government must also be matched by the private sector.

Details of how to apply are yet to be announced.


2. Innovate UK Funding


What is Innovate UK?

Innovate UK, part of UK Research and Innovation, is a government backed initiative to provide funding to a wide variety of projects across the UK. Currently, the scheme has 2,500 customers and has invested around £2.5 billion to businesses since 2007 .

Today’s announcement includes up to £750m government funding which will be made available to Innovate UK to distribute as follows:

  • Acceleration of up to £200m by way of grant and loan payments to existing customers on an opt-in basis;
  • An additional £550m to be made available to increase support for existing customers;
  • £175,000 to be made available to firms not currently in receipt of Innovate UK funding which is estimated to be in the region of 1,200 firms.

The first payments under this scheme are anticipated to be made by mid-May.



I am not in receipt of Innovate UK funding – how do I know if I’m eligible?

The government has not published guidance on this as yet, however it has been announced that the aim of the funding is to provide support to R&D intensive SMEs.