Future Fund sees more loans converted to equity but insolvencies rise
The British Business Bank has taken an equity stake in an additional 44 companies, as part of its Future Fund scheme to support high-growth, innovative businesses.
The state development bank now has a stake in 696 firms under the scheme, as of the end of last year.
The Future Fund was launched in May 2020 to support firms during the pandemic.
The investments were made in the form of convertible loans, subject to equal match funding from private investors.
Under the terms of the Future Fund, if the business surpassed its original funding amount through subsequent financing, the debt and associated interest would convert into equity.
The British Business Bank said that the number of insolvencies among Future Fund firms increased in the last quarter, with 27 more companies going under.
173 firms were insolvent as of 31 December, who had collectively been lent £151m.
“This sustained level of corporate activity is in part due to outstanding Future Fund loans nearing their three year maturity date,” the bank said. “All of the companies with outstanding loans have been contacted to set out the options available to them. As at 12 January 2024, 97 loans have been extended by up to two years.”
Companies in which the Future Fund now holds an equity interest include Liverpool-based medical device developer Enteral Access Technologies; Belfast-based Cumulus Neuroscience that has developed a data collection and analytics platform to help solve challenges in monitoring functional brain health and brain disorders; and Mishipay, an RFID tag-based technology company that lets shoppers scan and pay for shopping with smartphones.
Read more: Who has been utilising the future fund?
“The Future Fund was created to ensure a flow of capital, at the height of the pandemic, to companies that would otherwise have been unable to access government support schemes, while ensuring long-term value for the UK taxpayer,” said Ken Cooper, managing director, venture solutions, at the British Business Bank.
“We are pleased to see so many more of those companies now going on to raise further private sector capital, which will allow the Future Fund to benefit from their progress.”
Launched on 20 May 2020, and open for applications until 31 January 2021, the Future Fund issued 1,190 companies with convertible loans worth £1.14bn in total.
Property investment platform Shojin also recently had its investment from the British Business Bank converted into equity as part of the scheme.
In December 2020, Shojin received £860,000 from the British Business Bank, which resulted in the Future Fund acquiring a 5.16 per cent stake in Shojin as of December 2023.