The Future Fund – the latest financial support for businesses during COVID-19

Last month the Government launched the Future Fund, a new programme of financial support for “innovative UK companies with good potential”.

The Future Fund became available on Wednesday 20 May and offers to match sums invested by third-party investors in eligible companies which may be struggling during the current economic disruption. The scheme is currently open for applications until the end of September 2020.

The Government is keen to ensure the UK retains its world leading position in science, innovation and technology and recognises that smaller companies in these industries may typically rely on equity investment and, being either pre-revenue or pre-profit, are ineligible for other COVID-19 financial support programmes offered by the Government to date.

It has therefore established the Future Fund scheme to make funding rapidly available to such enterprises to enable them to continue their growth trajectory and reach their full economic potential.

We look at how the Future Fund scheme works and who might be eligible to participate here.

How we can help with the Future Fund scheme

The Future Fund programme is one of the more complex financial support schemes offered by the Government to companies contending with the current economic disruption.

Although the terms under which the convertible loans are made are non-negotiable, it may be worth obtaining legal advice to determine the rights and obligations on the parties involved, particularly concerning eligibility for the scheme and the effect of redemption and conversion of the loan.

It should also be noted that a director of the investee company, when making the application, must confirm that the company has the appropriate authorisations, waivers and approvals in place to fulfil its obligations in respect of the convertible loan agreements, including its ability to issue equity on conversion. We are able to advise on whether the relevant authorisations were in place, and if not, assist in making the necessary arrangements.

Finally, the company receiving the investment is required to appoint solicitors to handle the distribution of funds on execution of the convertible loan agreement.

If you have any further queries on the Future Fund, please contact Kath Shimmin or Paul Duggan.

This article has been co-written by Kath Shimmin and Paul Duggan.