Recent news confirms that the UK government will add a further £500 million ($625m) to the ‘Future Fund’ to help support startups on either side of the Atlantic. However, what are the requirements to benefit from this fund? What is the 50% split? Which companies are likely to benefit most?
The Future Fund in Brief
British Chancellor of the Exchequer Rishi Sunak confirmed that the UK would be investing £500 million in the Future Fund. This is a communal reserve built to support British and US-based startups alike. But how exactly will this work?
Ventures won’t have to be 100% British to benefit. In fact, they will only need to make sure that 50% of their business is based on British shores. The Fund will largely offer grants to those firms that have raised equity money. Potentially, the most advantageous of startup companies could claim up to £5 million in direct funding.
Data shows that £320 million ($400m) has already been pre-approved. Therefore, the race is on for more firms with at least £250,000 ($312k) in equity to start claiming.
Will All Startups Be Accepted?
Unsurprisingly, the competition to benefit from the handouts is fierce. It’s thought that as of June 2020, around 10% of all applications were successful. It’s also assumed that applications will take at least three weeks to process. Therefore, while some may see these statistics as showing the chances of funding to be slim, there is still a significant enough acceptance ratio for growing firms to take advantage.
US firms will likely find the proposal interesting. However, they must prove that they have at least 50% grounding in the UK to be successful in their applications. That is why the scheme is proving popular with those British companies who have set up operations in the US, as it means they can still benefit.
Crucially, the scheme is open on an ‘in-name’ basis to companies with UK links. Sadly, US-only ventures are out of luck this time. For those with even slight transatlantic connections, however, time is running out to apply.
Who Will Benefit?
Those striving for unicorn status will likely want to take full advantage. Those successful in seeding – particularly as the average round is worth around $2.2 million – will also probably want to take on more capital to push to the next stage.
The fact that most starter ventures begin from the ground-up, with more than 75% of such companies depending on personal capital, means that this fund is likely to prove very popular. Potential funding available up to £5 million will improve many smaller companies’ chances of growing through further funding rounds.
What’s more, the fund will also likely benefit those who are struggling to maintain composure during global uncertainty. In the meantime, startup companies and investors can continue to network through startup databases such as Fundz to kick things off.
The Future Fund is a tantalizing opportunity for startups everywhere. While it is a competitive reserve, it could stand to support even the smallest of innovators keen to grow.