The UK government created the Future Fund to provide access to capital to early-stage firms which were most likely unable to access debt capital during the COVID-19 health crisis. The fear was that a generation of innovative young firms would disappear as markets contracted and risk capital dried up. Launched in May 2020, the program ended in January 2021.
The Future Fund provided a funding match for young firms by purchasing convertible securities to help these businesses live to fight another day. Several securities crowdfunding platforms participated in the program as a path to providing matched funding. The expectation was that many of the firms would inevitably convert the securities, and the UK government would become equity holders in these private firms.
Earlier today, the British Business Bank – the entity that oversaw the program provided an update indicating that the Future Fund holds equity in 515 firms as of the end of December.
In total, the Future Fund invested in 1190 companies providing £1.14 billion in capital.
Ken Cooper, Managing Director, Venture Solutions, British Business Bank, commented on the update:
“The Future Fund was created to ensure a flow of capital, at the height of the pandemic, to companies that would otherwise have been unable to access government support schemes, while ensuring long-term value for the UK taxpayer. We are pleased to see so many of those companies now going on to raise further private sector capital, which will allow the Future Fund to benefit from their continued growth.”
The Bank provided the following breakdown of Future Fund holdings.
- Convertible Loans – 550
- Converted to equity – 515
- Exited investments – 43
- Insolvencies – 83
While some observers may be critical of the program as the government is backing private firms, the final tally of results will take some time. Just like venture capital firms anticipate, many investments will go bust, and some may do ok, but a few may end up becoming significant successes, driving economic growth and prosperity.
The list of companies in which the Future Fund holds an equity stake is available here.
