The UK government announces additional support for startups in a new coronavirus Future Fund to be launched in May.
The government is committing £250m towards a new £500m fund that would invest in high-growth private companies. The government also promised £750m worth of grants and loans to small and medium-sized businesses focusing on research and development.
The private sector will be supplying the other half of the £500m fund, named the Future Fund, according to the government. The investment into startups, which will be between £125,000 and £5m, will therefore only come alongside private sector investment to ensure that they also have “skin in the game”.
The government-backed investment in startups will come in the form of convertible loans, meaning that if the loans are not repaid they will convert into equity in the company. It is designed to provide liquidity in difficult times and promote private investment, rather than to end up with the UK government owning equity in a large number of UK tech companies. These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme.
To qualify you must have a business that:
- is based in the UK
- can attract the equivalent match funding from third-party private investors and institutions
- has previously raised at least £250,000 in equity investment from third-party investors in the last 5 years
The full headline terms are here.