Chancellor of the Exchequer Rishi Sunak (pictured) has expanded the scope of the future fund to allow a wider number of suitable companies to apply.
The fund, which launched at the end of May and is delivered by the British Business Bank, offers convertible loans ranging from £125,000 to £5m from the government, subject to at least equal match funding from private investors. It will initially be open until the end of September.
Now the future fund has been extended to accommodate businesses that contribute significantly to the UK economy, but do not have their parent company based in the UK because they participated in a non-UK based accelerator programme.
Accelerators are selective, open and competitive programmes for early stage companies, offering access to industry mentorship, seed or venture capital and other professional support.
One of the conditions of joining some accelerator programmes outside of the UK is that the businesses are required to create a non-UK incorporated parent company.
A non-UK ultimate parent company of a corporate group which participated in an accelerator programme on or before 19 April 2020 may now be eligible for the future fund, provided that the company meets a variety of criteria.
These include having half or more of its employees based in the UK or half or more of its revenues from UK sales.
Read more: Industry gives future fund a wary welcome
Victoria Price, UK&I private client services leader at EY, welcomed the expansion of the scheme, but also called for further changes.
“The expansion of the scheme is a clear response to where the government has seen demand,” she said.
“However, the changes announced today still don’t address the incompatibility with other tax efficient schemes, an issue that has been raised for early stage investors. As such, we may see further adaptions further down the line.”
As at 28 June, the future fund has approved over £320.6m of convertible loans to 322 innovative businesses across the UK.
Initially, £250m was made available by the government for investment through the scheme, to be matched by private investors, with the Treasury making clear the amount could be increased if needed.
Due to the popularity of the fund, more funding is being made available and the scale of the scheme will be kept under review.
Some peer-to-peer lending platforms have been incorporating the future fund.
Assetz Capital is looking to utilise the fund as part of plans to scale to offer the coronavirus business interruption loan scheme.
And as part of its July relaunch, Crowd2Fund aims to introduce a future fund product that has the ability for private investors to co-invest alongside the government, to give another source of capital for small- and medium-sized enterprises.