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COVID-19 update: Future Fund update

COVID-19 update: Future Fund update

The UK Government has announced further details of the Future Fund support measure for innovative and high potential companies with existing external investment, which is now open for applications.

The link to the Future Fund portal which includes further details and access to the online application is as follows: https://www.uk-futurefund.co.uk/

For a Future Fund application, the lead investor must make the initial application, the investee company will be required to provide further information and review the application.

It is important to note that the further details have clarified a question that many investors had about the scheme relating to EIS/SEIS investors tax relief:

  • Matched investment from the private investor(s) being made alongside the Future Fund investment will not qualify for EIS or SEIS
  • HMRC intend to alter the EIS/SEIS rules such that any investor who makes a matched investment with the Future Fund, does not jeopardise their EIS/SEIS status for previous investments they may have made in the investee company

BHP’s one page summary of the Future Fund can be found here, further points to note from the recently released details are:

  • The £250m fund is available from the Government on a ‘first come, first served basis’. The online platform is now open for applications and will be until the end of September 2020
  • Companies must have previously raised equity investment of at least £250k from third party investor(s) in the period from 1 April 2015 to 19 April 2020
    • Third party for this purpose does not include founders, employees, workers or consultants (although not all of these terms are defined)
  • The investor(s) must fall into at least one of a certain number of categories (which include investment professionals, certified sophisticated investors and certified high net worth individuals)
  • The Government want all of the funding raised to be used for trading and growth/development purposes and therefore certain restrictions have been placed on the use of the finance raised from the Future Fund and the matched investment, including:
    • Repayment of shareholder loans
    • Paying dividends or distributions to shareholders
    • Paying bonuses or other discretionary payments to employees, consultants or directors for a period of 12 months (other than where already contracted and in the ordinary course of business)
    • Paying advisory fees
  • The terms of the convertible loans, which are set out in a ‘boiler plate’ convertible loan agreement are broadly non-negotiable

Should you wish to discuss this further, please get in touch.