The government will launch a replacement scheme to the future fund in early summer.
In his Wednesday Budget, Chancellor Rishi Sunak revealed ‘future fund: breakthrough’, a new £375m scheme that will encourage private investors to co-invest with government in highly innovative research and development (R&D) companies.
These R&D intensive companies accelerate the deployment of breakthrough technologies which can transform major industries, develop new medicines and support the UK transition to a net zero economy.
Read more: Chancellor unveils recovery loan scheme
Due to high research and development costs, breakthrough technology companies typically require more capital than other companies to fuel the later stages of their growth.
Future fund: breakthrough will target R&D intensive companies seeking a minimum of £20m and will crowd in private sector investment to support their growth.
As of February, £1.1bn has been spent on convertible loans for 1,140 companies as part of the future fund scheme. The scheme closed for new applications on 31 January and existing applications need to have been accepted and legally completed by 31 March.
“The chancellor has confirmed the British Business Bank’s central role in the next phase of the UK’s economic recovery from Covid-19,” said Catherine Lewis La Torre, chief executive of the British Business Bank.
“As businesses begin to plan for the post-Covid period, they will need targeted finance to support them.
“We welcome today’s announcement of two new schemes, one to provide debt finance to a broad range of businesses, and the other to invest equity alongside the private sector in fast growing innovative firms.
“Both schemes will help drive the innovation and growth needed to support the UK’s long-term prosperity.”
Lee Birkett, founder of JustUs, a peer-to-peer lending platform which has raised £1.2m under the existing future fund scheme, welcomed the new future fund: breakthrough but did not see the difference to the current future fund scheme.
“It’s welcome, the country needs access to capital,” he said.
“The government is looking to step in where external investors from outside the UK are not investing.
“The new scheme is not a negative but is just an extension of the existing scheme and nothing substantial.”