Half of Future Fund recipients say scheme saved business
An independent economic evaluation of the British Business Bank’s (BBB) Future Fund has found that 48 per cent of recipients said their company would have been likely to close without its support.
The BBB commissioned RSM UK Consulting to undertake an early assessment economic evaluation of the Future Fund.
The Future Fund deployed £1.14bn of funding through Convertible Loan Agreements (CLAs) to 1,190 equity backed companies, with at least equal match funding from private investors. Collectively, the companies funded employed 28,000 people.
A number of peer-to-peer lending platforms participated in the Future Fund, including Assetz Capital, CapitalRise, FutureBricks, Crowd2Fund, Propio and JustUs.
The scheme was open to applications from May 2020 to January 2021.
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The pandemic led to the number of equity deals falling 32 per cent in the first quarter of 2020 from the fourth quarter of 2019. The report found that 62 per cent of Future Fund recipients reported they probably not have been able to obtain similar funding elsewhere.
The report also found that only 26 per cent of respondent companies said they could have raised similar equity finance in its absence.
Of the companies that received funding, 41 per cent were technology or IP based. Most recipients (85 per cent) reported they had undertaken research and development or developed new or modified goods/services after receiving funding, suggesting that funding went to innovative companies.
The fund was found to have supported diverse management teams. More than half (52 per cent) of firms had at least one management team member from a black, asian or other ethnic minority (BAME) background, with five per cent of teams solely from BAME backgrounds.
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More than two-thirds (69 per cent) of companies had at least one female management team member, with 42 per cent also having at least one female founder.
Compared to similar schemes in Europe, the Future Fund was found to have provided greater funding to more businesses.
In comparison to Denmark’s two schemes, which were the next largest, the Future Fund delivered five times the amount of funding to three times as many companies.
“The Future Fund was created at a time of great uncertainty in the venture capital markets and when the country was learning new ways of working through a pandemic”, Ken Cooper, managing director of venture solutions at the British Business Bank said.
“Against that backdrop, seeing the positive outcomes reflected in this independent evaluation is fantastic. We supported over a thousand companies many of which have since gone on to gain subsequent investment where they might not otherwise have survived.”
Business secretary Grant Shapps added: “Whether it was supporting firms to stay open or equipping them to access capital and grow, today’s findings highlight the vital role of the Future Fund in keeping our most innovative businesses ticking along during a challenging time. My priority is ensuring we continue to champion the interests of British firms to help unlock economic growth right across the country.”
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