UK gov launches £375 million fund for "game-changing" startups

The UK government has launched its £375 million startup Future Fund: Breakthrough scheme that aims to help “high-growth, R&D intensive companies bring game-changing technologies to market.”

Future Fund: Breakthrough was first announced in March as part of chancellor Rishi Sunak’s budget announcement. It's separate from the original Future Fund, which was announced in April 2020 and offered convertible loans of up to £5 million to UK companies struggling with the financial impacts of the pandemic.

Focused on later-stage R&D startups, in particular those that accelerate deployment of breakthrough technologies, develop new medicines, and support the UK’s transition to a net-zero economy, Future Fund: Breakthrough will see the government spend up to £375 million on stakes, with each investment set to be matched by private funds.

British Patient Capital, which is a subsidiary of the UK government’s economic development-focused British Business Bank, announced that the scheme is now welcoming online application forms from eligible investors.

Companies interested in benefiting from the scheme have not yet been asked to apply. However, the British Patient Capital outlined some requirements for applicants, such as being able to raise a minimum total investment round size of £30 million, with the maximum Future Fund: Breakthrough contribution to an investment round being 30%.

Interested companies are also required to have raised at least £5 million of equity investment from third-party investors in previous funding rounds.

Commenting on the news, Tech Nation chief executive Gerard Grech said that “R&D funding is more important than ever to turn the UK’s new breed of innovators into game-changing market leaders”, especially “as the potential of technologies like AI, machine learning and quantum computing become fully realised and applied at scale”.

“Funds focused specifically on R&D intensive companies aligned to the UK’s strategic sectors, including net zero companies, will help to tackle some of the biggest challenges facing society today. It will open up new job opportunities, drive economic growth, and cement UK Tech as world-leading,” he added.

British Patient Capital CEO Judith Hartley said that the scheme “will enable these R&D intensive companies to raise the patient capital they need to fuel the later stages of their growth, and in doing so, help ensure the UK is a world leader in the industries of the future”.

“With many world-class universities and a strong track record in science and research, the UK is fertile ground for creating high-growth companies based on cutting edge technologies. Through the commercialisation of R&D, these transformative companies will help accelerate the deployment of innovative breakthrough technologies that can transform major industries; develop new medicines; support the transition to a net zero economy and strengthen the UK’s position as a science superpower,” she added.