The Treasury is to allocate up to £250 million to an investment fund for high-growth companies on a matched basis with private sector money. The matching structure means a potential fund AUM of £500m if all capital is deployed. In addition, Treasury also announced an R&D loan and grant package. These initiatives are focused on supporting innovative businesses in the technology sector.
The fund will launch in May through the British Business Bank. UK companies can request between £125,000 and £5,000,000 of Government funding, with private investors matching (or increasing) their contribution. The support is structured as a convertible loan and in the event it is not repaid, the loan will convert into equity. Therefore businesses must take care to ensure the capital injected fits within the terms of current equity and debt commitments and all requisite investor approvals are obtained. Applicants must have raised at least £250,000 in equity investment from a third party over the past five years, a safeguard against speculative fundraising from the fund.
The fund sits alongside further support packages for innovative businesses (in aggregate some £1.25bn of support) including £750 million of loans and grants for innovative businesses. Innovate UK’s grants and loan scheme is administering the grants and loans. The loans will be allocated only if the applicant company passes an ‘innovation assessment’. Details of the application process are to be made available in due course.
We will be happy to assist with the application process for these support packages and will keep you informed of the details as they are clarified.