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Covid-19 September 24, 2020
Future Fund: last day for applications pushed back to 30 November 2020

Future Fund: last day for applications pushed back to 30 November 2020

In April 2020, the Treasury announced a lifeline for early stage UK businesses in the form of the Future Fund.  Rishi Sunak pledged the British Business Bank to match investment of cheques between £125,000 and £5 million in high-growth companies on a one-to-one basis with private investors and in the form of convertible loan notes.

The Future Fund was due to close to new applications next week on Wednesday 30 September 2020.  That deadline was today pushed back.

The Treasury has just announced plans to extend the deadline for making Future Fund applications as part of its Winter Economy Plan. Companies have up to the end of November to submit their applications and complete their funding rounds by the end of 2020.

Will my company qualify?

Not all companies will qualify; the qualification rules remain the same.

  1. The investee company must have raised at least £250,000 in equity from third party investors in previous funding rounds between 1 April 2015 to 19 April 2020.
  2. If the investee company is part of a corporate group, it must be the parent (subject to 4 below).
  3. The investee company must not have shares or other securities listed/quoted on a regulated market, multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue.
  4. The investee company must be a UK incorporated limited company or be eligible to apply as a non-UK parent company (see further details here).
  5. The investee company must have been incorporated on or before 31 December 2019 (or if you are a non-UK jurisdiction company, this criterion applies only to at least one UK subsidiary operating company).
  6. At least half or more of the investee’s company’s employees must be based in the UK OR the company must generate half or more of its revenue from UK sales (which means at least half of the revenue must be generated from the UK but allows for sales made to customers outside of the UK).

The lead investor makes the Future Fund application (on behalf of the other investors and the investee company itself) via an online portal accessible on the British Business Bank website.

Click here to access the British Business Bank’s interactive eligibility quiz.

Assuming the investee company qualifies, there is a prescriptive and somewhat inflexible process needing to be followed in order to draw down the funds.

The government clearly did not want to get involved in the faff and mechanics of closing out hundreds of individual funding rounds and the process was cleverly designed so that the involvement of the British Business Bank in the process is kept to a minimum with the burden on execution largely put onto the investee companies and their solicitors.

15-step path to closing out a Future Fund round…

  1. Your lead investor would need to register here (and meet the investor qualifying conditions, which if they are high net worth or institutional investor should not be an issue.)
  2. You, the company, are then asked by the Future Fund to confirm the details of the investors’ registration.  Hopefully there will be no problems with the application and there will not be correspondence to and fro with the Future Fund querying the qualifying criteria, for instance.
  3. The Future Fund then emails the company’s lawyers to confirm their identity and that they can hold client monies.
  4. The investors need to clear standard AML and KYC checks, and the company lawyers will need to be involved there.
  5. The company lawyers will need to prepare for you a shareholder resolution (to give the board authority to issue the shares on conversion of the CLA on a non-pre-emptive basis) along with board minutes to record the decisions of the board.  And you would need the shareholder resolution to be signed by the holders of 75% or more of your share capital. There may also be investor consents to obtain.
  6. The Future Fund will send the prepopulated CLA (the template CLA is available here) using details provided by the lead investor in its initial application out to the parties for signature via DocuSign. The investee company and the investors sign – but don’t date – the CLA.
  7. Provided necessary AML checks have been completed, the investors can start to wire the funds to the company lawyer’s client account and they must each also provide irrevocable instructions that such fees can be released on completion.
  8. The directors of the investee company will sign and date the directors’ confirmation letter which will be sent to them by DocuSign (confirming to Future Fund that the company has fulfilled a number of requirements, such as having received in excess of £250,000 in previous funding rounds, and that the company has received all necessary authorisation to enter into the CLA and the letter.)
  9. Once all the company lawyers have received all the non-Future Fund loan amounts into its client account, the company lawyers will sign and date the solicitors’ confirmation letter which will be sent to them via DocuSign (confirming to Future Fund that thefunds are in their client account amongst other things.)
  10. Once all the parties (excluding Future Fund) have signed the CLA by DocuSign and the necessary director confirmation and solicitor’s confirmation (referred to in points eight and nine) have been submitted, FF will decide whether they wish to complete.
  11. If approved, they will sign and date the CLA and provide confirmation of completion.
  12. The Future Fund then wire thefunds to the company lawyers’ client account.
  13. When the Future Fund funds have been received in the company lawyers’ client account, the lawyers should pay thosefunds plus the private investor funds to the investee company after deducting their fees.
  14. The shareholder resolution needs to be filed at Companies House.
  15. The CLA then sits on the investee company’s balance sheet as a liability until such time as it is repaid or converted into equity

FAQS asked of HLaw

Is the Future Fund application SEIS/EIS compatible?

The Future Fund is not SEIS/EIS compatible. That is unlikely to change.  Private investors who are matching the Future Fund’s investment will not be able to apply for SEIS/EIS treatment as regards their investment.

Can my company do secondaries at the same time as a Future Fund application?

Yes, there is nothing per se that will prevent a Future Fund investment being executed at the same time as cash out for existing investors or management so long as you are not using the Future Fund investment (or the matched private investment) to fund it.

At what point in time is the 50% of UK employees / 50% UK sales test looked at for the purposes of qualification?

The date of completion.  That means the investee company is not then bound to remain above those thresholds post completion, and could for instance expand into other countries.

Can the investee company submit the application instead of a lead investor?

No, the Future Fund application is an investor-led process and must be kicked off by the lead investor. The lead investor should ensure all details provided in the initial application form are correct, including details of signatories as this can hold up the process later on if their details turn out to be incomplete or incorrect.

If you believe your company can benefit from the Future Fund, do reach out to

This piece was prepared by Victoria Clement with input from Henry Humphreys and Nick Westoll.

All the thoughts and commentary that HLaw publishes on this website, including those set out above, are subject to the terms and conditions of use of this website.  None of the above constitutes legal advice.  Much of the above will no doubt fall out of date and conflict with future law and practice one day.  None of the above should be relied upon.  Always seek your own independent professional advice.

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