Reed Smith Client Alerts

Following on from the implementation of the UK government’s earlier and broader COVID-19 finance schemes (see our summary table of those schemes at, on 18 May 2020, the UK government officially launched the Future Fund (FF). It is the latest UK government initiative to support businesses in light of the COVID-19 crisis, and is designed to ensure that innovative companies with good growth potential can receive the investment they need to continue operating during the current crisis (Eligible Companies). Eligible Companies can receive between £125,000 and £5 million in the form of a convertible loan that must at least be matched by co-investors (Loan). The application process opened on 20 May 2020 via the British Business Bank (BBB) portal and further guidance has since been provided on the BBB website, which is reflected in this alert. The scheme is initially open for applications until the end of September 2020, with the government initially making £250 million available for the FF.

Please note that the BBB will be updating the FAQs regularly, and so the information provided here is accurate as at 16 June 2020.

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Eligibility criteria

As the application is investor-led (see ‘Process and key documents’ below), there are various parameters relevant private investors (Private Investors) should be aware of:

  • All investors must fall within a certain category of ‘private investors’, such as being a sophisticated investor, high net worth individual, high net worth company or investment professional, each as set out in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
  • Persons that exercise control over the Eligible Company (e.g., majority owners) do not qualify as Private Investors – any contributions made by them will not be matched by the FF, although they may invest additional amounts after advancement of FF funds up to a pre-agreed headroom.
  • Private Investors in the Eligible Company cannot exceed 147 in number to avoid needing to produce a prospectus.
  • A nominee special purpose vehicle used by a crowdfunding platform is capable of being the lead Private Investor if it is the Private Investor on record and a party to the convertible loan instrument on behalf of the underlying crowdfunding investors.

A company must meet all of the following conditions to be considered an Eligible Company:

  • It has raised at least £250,000 in equity from third party investors in the last five years (1 April 2015 to 19 April 2020). This excludes secondary purchases of shares, and any amounts invested by founders, employees, works or consultants or their connected parties, although such parties may invest the funds to be matched under the FF.
  • If the Eligible Company is a member of a corporate group, it must be the ultimate parent.
  • The Eligible Company cannot have any of its shares listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue.
  • The Eligible Company must be a UK-incorporated limited company.
  • The Eligible Company must have been incorporated on or before 31 December 2019.
  • At least one of the following must be true for the Eligible Company:
    • half or more of its employees are UK based; or
    • half or more of its revenues are from UK sales, which we understand to mean sales to UK customers and not sales generated in the UK from overseas customers.

Eligible Companies that have received other COVID-19 government support are eligible to apply, as are those that are private equity backed.