Future Fund opens to British start-ups headquartered overseas

Future Fund extends to allow UK tech start-ups that have joined US accelerator programmes to apply for emergency coronavirus bailout funding

 Chancellor Rishi Sunak in a Waterstones bookshop, Future Fund start-ups concept

Chancellor of the Exchequer Rishi Sunak

The Future Fund is now open to British start-ups that until now have been blocked because they moved to the US to attract investors.

UK companies that have taken part in accelerator programmes and were required, as part of that programme, to have parent companies outside the UK can now apply for investment. This will allow tech entrepreneurs who have moved their legal headquarters overseas to raise funds to participate.

>See also: British start-ups with American investors to qualify for Future Fund

Accelerator programmes, such as TechStars or Y-Combinator, give businesses access to finance, mentorship and expert networks.

Participants in accelerator programmes are often required to set up a non-UK parent company in order to participate which means some did not meet the Future Fund criteria of having a UK parent company when it opened for applications in May.

To date, more than 320 companies have benefited from £320 of support from the fund.

Under the scheme, early-stage, high-growth businesses from a diverse range of sectors can apply for a convertible loan of between £125,000 and £5m to help them through the Covid-19 crisis.

The government could end up with stakes in a number of UK tech start-ups via the programme.

>See also: Future Fund approves just approves 10% of loan applications

Rishi Sunak, the chancellor, said: “Our start-ups and innovative firms are one of our great economic strengths. As we begin to bounce back from coronavirus, they will help drive our recovery and create new jobs. This change means that those start-ups who have strived to be the very best, and taken opportunities to grow their business, will be able to benefit from our world-leading Future Fund.”

Business secretary Alok Sharma added: “As we restart our economy, it is crucial that our innovators and risk-takers get all the support they need to flourish. Our decision to relax this rule recognises the importance of many of the UK’s most cutting-edge start-ups as we bounce back from coronavirus.”

Does your start-up qualify for Future Fund?

A non-UK ultimate parent company of a corporate group which participated in an accelerator programme on or before April 19 2020 may be eligible for the Future Fund, provided that the company has satisfied the following:

  • 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 is the equivalent of a UK limited company in the relevant non-UK jurisdiction
  • 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
  • it participated in an accelerator programme, on or before April 19 2020, and participation in the accelerator mandated incorporation of the ultimate parent company in a non-UK jurisdiction
  • if the group (or any entity within the group) was in existence before the company was incorporated, the ultimate parent company of the group (or the sole entity, if applicable) must have been incorporated in the UK
  • the company is the ultimate parent company of a Group which has:
    – half or more of its employees based in the UK, -or
    – half or more of its revenues from UK sales
  • it is the ultimate parent company of a group which contains at least one subsidiary operating company incorporated in the UK on or before 31 December 2019; and
  • the company received investment from the accelerator programme on or before April 19 2020

Further reading

Future Fund – government tech start-up bailout scheme how it works

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