Q:

Are full details available yet on the UK govts Future Fund?

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Rachel Amos
The Senate
23 Apr 2020

A: SenseCheck

  • 3 Yes
  • 1 Unclear
  • 0 No
SenseCheck complexity

Newest Answer Oldest Answer

  • 17 Jun 2020
  • Yes

    Simple

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    Rachel Amos
    The Senate

  • Comment

  • 26 May 2020
  • Yes

    Simple

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    Adrian Smith
    The Senate

  • Comment

  • 26 May 2020
  • Comment

  • 20 May 2020
  • Yes

    Simple

    Full details have been published. The Future Fund opens today, May 20th for applications and is expected to remain open until the end of September. https://seedlegals.com/resources/seedlegals-…

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    Sandra Norman
    The Senate

  • Comment

  • 18 May 2020
  • Comment

  • 25 Apr 2020
  • No

    Simple

    Really helpful article from Charles Fletcher from Taylor Vintners - key recommendations set out below but best to read the note in full:

    1. further guidance and information on assessment criteria to be provided as soon as possible to understand evaluation process for applicants; and
    2. anti-manipulation/ fair dealings provisions to be considered and made clear, so companies and their investors can understand what financing structures will be acceptable alongside any given Future Fund investment proposal.
    3. can there be a look-back for matched funding (i.e. in the last month or so). Clarity on whether the matched funding needs to be on identical terms to the Future Fund instrument or whether it can be, for example, on ‘no more favourable terms’; and we also need clarity on whether the matched funding can be by way of priced round/ advance subscription. This is particularly pertinent because it would be extremely helpful to companies if persons participating in the matched funding could be eligible for EIS relief.
    Under the current EIS rules, we do not see how investors in convertible loans will be eligible on EIS relief on that investment, will not eligible for EIS relief on future investments in the company from when they take the CLN, and, we think, will be potentially at risk of clawback of EIS relief on previous investments in the company, if ‘value’ is returned to them under the CLN arrangements. Given the number of start-ups who have EIS investors, and the fact that existing investors will be the most likely source of matched funding, this is a big issue.
    4. As well as SEIS/EIS/VCT interactions for the purposes of state-aid related eligibility, it will also be important to understand the aggregated effect of job retention scheme, investment from Enterprise Capital Funds, investment from European Investment Bank–backed VCs, Grants and Tax breaks: need clear guidance on how companies should assess their potential eligibility for the Future Fund in light of other state aid they may have received. This should be done as soon as possible, so companies who are contingency planning can understand their potential eligibility before they change any other interim funding plans or pathways they may be looking at.
    5.opens a direct line of communication with, and guidance for, crowdfunding platforms so they can play an appropriate part in the successful implementation of the scheme.
    6. We recommend to the Future Fund that clarification is provided on what is meant by:
    - private third party investors, both in light of the above concerns regarding state aid and in terms of investor profile more generally; and
    - substantive economic presence in the UK.
    7.“The bridge funding shall be used solely for working capital purposes and shall not be used by the company to repay any borrowings, make any dividends or bonus payments to stathe Future Fund, management, shareholders or consultants or, in respect of the Government loan, pay any advisory or placement fees or bonuses to external advisers.”
    In practice, this may well mean that Future Fund recipients open a specific separate bank account to demonstrate this use of funds. It also means that any professional advice on the funding may need to come out of other funds. We would hope that the money raised from the matching funds can be used, but it is not clear whether this is caught by the words “The bridge funding”.
    We recommend to the Future Fund:
    -further detail be provided as to how this will work in practice; and
    -it should be made clear that a separate bank account (or some other proof of qualifying spending methodology) is advisable.
    8. The Government shall be entitled to transfer the loan and following conversion of the loan, any of its shares without restriction to an institutional investor which is acquiring a portfolio of the Government’s interest in at least ten companies owned in respect of the Future Fund.
    In addition, the Government shall be entitled to transfer any of its shares without restriction within Government and to entities wholly owned by central government departments.”
    We recommend to The Future Fund:- the Future Fund terms should build out reasonable safeguards for potential borrowers who might be concerned at the prospect of having a material investor whose identity and modus operandi it had not bargained for.
    9. we recommend companies assessing the Future Fund as a source of finance should:
    - look first at the various other schemes the Government has introduced to address the effects of the pandemic on business;
    - monitor further news and announcements for further details of the Future Fund set-up;
    - if the Future Fund remains a preferred option and the company is potentially eligible, consult with their stakeholders to ensure they can deliver the necessary corporate approvals to put in place the funding;
    - consider the effect of these convertible loan terms on existing equity, including management/staff, and consider whether any alleviation measures will be required to address any reduced alignment or disquiet that could result; and
    consider carefully the current unclearness around certain key features of the scheme and in particular the timing of funds flow under Future Fund investments.

    https://www.taylorvinters.com/article/the-ne…

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    Rachel Amos
    The Senate

  • Comment

  • 24 Apr 2020
  • Unclear

    Complex

    Guidance is coming - watch this space.: Headline Terms have been published by HMG - further guidance/details presumably to follow.

    https://assets.publishing.service.gov.uk/gov…

    Obtaining funding direct from central government is never straight forward.

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    Jan Edmunds
    The Senate

  • Comment

  • 24 Apr 2020
  • Comment

  • 23 Apr 2020
  • No

    Simple

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    Adrian Smith
    The Senate

  • Comment

  • 23 Apr 2020
  • Comment

  • 23 Apr 2020
  • Comment

  • 23 Apr 2020
  • Comment