The government’s £500m future fund opened today to a wary welcome by peer-to-peer industry stakeholders.
UK-based companies can now apply for a convertible loan of between £125,000 and £5m, to support continued growth and innovation in sectors as diverse as technology, life sciences and the creative industries.
The government-backed fund, which was first announced last month, will be open until September 2020 and is being delivered in partnership with the British Business Bank.
Businesses will need to have investors to provide funding which will be matched by the government. The loans will convert to equity if not repaid. But critics have warned that the fund does not go far enough.
“The future fund is not big enough,” said Mike Bristow, chief executive of CrowdProperty.
“I think there is demand or a need to back our most innovative businesses that is greater than the £500m currently earmarked.
“We’ve got world-leading tech businesses throughout fintech, proptech and all of the tech sectors and I think that £500m, if it’s run well, will ultimately lead to a competition for that fund.
“Great companies will get access to it but what about the really good companies that could still become world class?
“The trick they’ve missed around supporting innovative businesses is supporting the earlier stage businesses that rely on angel investors benefiting from EIS relief.
“I think some measures to encourage more angel investing at this time, for example, by increasing the tax relief on EIS schemes, would benefit earlier stage businesses.”
However, Yann Murciano, founder and chief executive of Blend Network, said that he was pleased with the scheme.
“The future fund clearly demonstrates the government’s commitment to supporting innovative companies in the UK and is a clear signal to the government’s commitment to forging a key place for the UK at the forefront of innovation in the post-Brexit, post-Covid world,” he said.
Innovative Finance also welcomed the government’s future fund.
“The future fund is a welcome step to support our start-up and scale-up economy, and a much-needed intervention from government to back high-growth businesses,” said Charlotte Crosswell, chief executive of Innovate Finance.
“Many fintech companies have been unable to access the other loan schemes available, so this will provide vital funds to firms in the sector.
“The UK has a reputation as a global fintech leader and we must make sure this remains the case. We have seen some incredible transformation of financial services from the fintech sector over the past decade and it will play a key role in our country’s economic recovery.
“In addition, the opportunity to export more of these products and services to overseas markets will showcase the unique innovation the UK has built, and the role fintech can play.”