The UK government has introduced a range of measures to support businesses through the economic hardship caused by the Coronavirus pandemic, including ‘The Future Fund’.
The Future Fund may be one of the least well known of the measures introduced, but if you run an SME with a recent history of receiving equity investment, it could be one of the best ways of securing additional funding for your business. Equally, if you are an investor considering an investment, the Future Fund’s involvement could be an opportunity to make your investment less risky and more effective.
What is the Future Fund?
The Future Fund will match equity investment secured by qualifying companies by lending between £125,000 and £5m using convertible loan notes. In other words, if your business has an investor willing to invest £125,000 or more, an application to the Future Fund could double the company’s funding.
However, the Fund is very targeted, and as such the eligibility criteria, for both the investee company and the investor, are relatively narrow.
What are the criteria?
For your company to be eligible, it must:
- Be UK incorporated on or before 31 December 2019;
- Have at least half of its employees based in the UK or half of revenues from UK sales;
- Not have its shares listed;
- Have raised £250,000 in equity investment in the last 5 years; and
- Not be a subsidiary of another company.
Whilst the majority of these are either true or false, it is possible to make changes in order to meet the criteria, and our Corporate team has experience advising businesses through restructurings in order to achieve eligibility and secure funding.
What this means for investors
For investors, though assessment against the eligibility criteria is a rather technical exercise, the criteria are less strict than for the investee company. Almost all professional investors will be eligible.
That said, expert advice should be taken on any investment documents which sit alongside the convertible loan from the Future Fund, as it will need to be tailored in order to adequately protect your investment.
Applications for the Fund close on 31st January 2021, so companies and investors alike should act now to assess their eligibility, secure investment, and make their application to the Fund.
Contact our expert Corporate team now for advice in respect of your eligibility and application.