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Future Fund Data: What We Know So Far…

Lucy Wilson

Category: Uncategorized

With the help of the Future Fund, high-growth UK companies secured a record number of investments in 2020, at 2,928 equity deals. But what do we really know about these government-backed investments? We explore which ambitious companies have benefited from the Future Fund, plus its most prolific co-investors, and their thoughts on the scheme.

The Future Fund: a refresher

Launched back in May 2020, the Future Fund was a UK Government fund, managed by British Business Bank. It was set up to support innovative, pre-profit companies affected by COVID-19, by matching funding from private investors. The matched funding scheme provided convertible loans, ranging from £125k to £5m, to eligible investee companies. The Government extended the Future Fund in November, with applications eventually closing on 31st January 2021.

What is a convertible loan?

Convertible loans are essentially debt that can be converted into equity. Under the terms of the Future Fund, these loans cannot be used to repay any borrowings, nor pay dividends, bonuses, or advisory fees. Instead, the funding will be used to directly drive innovation and growth. Private investors participated under the same terms as the Future Fund: investors can choose to have their loan repaid on maturity (36 months) or at certain events, such as an exit, with accrued interest (at least 8%) and a redemption premium. If not repaid, then the loans will convert to equity on the company’s next fundraise or exit.

Who could apply?

The Future Fund was created as an investor-led scheme, with the lead investor applying on behalf of themselves, any other co-investors, and investee companies. Whilst the fund was sector-agnostic, there were certain criteria that businesses needed to meet in order to receive investment. Those that met the required criteria, and were the first to complete the application process, were the first to secure funding.

As a reminder, these were the eligibility criteria for recipient companies:

  • A private company, incorporated in the UK on or before the 31st December 2019 (must be the parent company, if part of a corporate group)
  • Already raised at least £250k in equity funding from a third-party investor in the five years before the Future Fund’s launch
  • At least half of employees UK-based or half of revenues from UK sales

Where did our money go?

Whilst the Future Fund is now closed to new applicants, the complete list of recipients and co-investors is yet to be announced to the public. The latest figures released by British Business Bank (on February 25th) confirmed that 1,140 companies have been approved for £1.12b of convertible loans since launch—the average value received being £982k—matched by at least the same amount from third-party investors. 

The Beauhurst platform tracks all UK fundraisings, even those that aren’t announced to the press (by analysing the SH01 filings submitted when shares are allotted). But these rounds are convertible loans, which means we’ll only see the Future Fund appear on company documents if and when the loans turn to equity. So far, we’ve been able to track 134 of these deals, but the remaining 1,006 are currently unknown. Using these tracked deals, however, we can begin to get a sense of where public funding has ended up.

Future Fund recipients: by sector

Based on current data, Technology and IP-based businesses are likely the most common recipient of Future Fund investment, making up 40% of investee companies (as of March 15th). Also ranking highly are companies in the Business and Professional Services (26%) and Industrials (12%) sectors. As stated in our initial Future Fund analysis back in October, these three sectors were always going to be overrepresented. The Future Fund’s eligibility criteria favoured these sectors, as they also top the list of number of companies that have raised equity in the past five years. 

Future Fund recipients: by growth stage 

Our initial figures suggest that earlier-stage companies have been the most likely beneficiaries of Future Fund investment, seemingly in keeping with the scheme’s overall objective. Whilst a third of the Future Fund’s known recipients are seed-stage companies, however, the majority (52.6%) are at venture stage, meaning they have been around for a few years already, have significant traction, technology or regulatory approval, plus funding and a valuation in the millions.

Again, this comes as no surprise, as investee companies had to not only have raised £250k in equity funding in the five years prior, but also secure at least £125k from third-party investors to be eligible for the Future Fund. But, as we pointed out in our annual equity report, it was the businesses that hadn’t raised equity before—the ones actively excluded from the Future Fund—that struggled the most to find capital during the pandemic.

Future Fund recipients: by region

Whilst current Future Fund data is limited, one thing we do have full visibility over is the regional distribution of investments. According to the British Business Bank, 61% of funding has gone to companies based in London, in line with wider equity market trends. Meanwhile, the remaining 39% of deals were relatively well-dispersed across the country. Outside of the Capital, the regions with the most investee companies are the South East and South West, with 15%, and the North West, North East, and Yorkshire & The Humber, with 11%. 

It’s good to see that, aside from London’s unsurprising dominance, England’s southern regions don’t seem to have benefited disproportionately to the North. In comparison though, the Midlands have received just 4% of Future Fund investment, whilst the devolved nations of Scotland, Wales, and Northern Ireland are home to the fewest number of investee companies (3%).

Future Fund recipients: by managing team

Figures from the British Business Bank also show the breakdown of investee companies’ senior management teams, by both gender and ethnicity. These indicate that 78% of Future Fund investment went to businesses with mixed-gender teams, but that just 1.3% went to all-female teams. Meanwhile, companies with mixed-ethnicity management teams received 57% of total funding, whilst those with all-BAME teams secured 5.3%.

Who were the Future Fund’s co-investors?

As of March 15th, we’ve also tracked 107 participating investors, ranging from private equity and venture capital firms, to commercialisation companies and angel networks. But the most active co-investors with the Future Fund look likely to be crowdfunding platforms, followed by local and central government funds.

Current figures suggest that Seedrs and Crowdcube have contributed by far the most towards the scheme, with 58 deals worth £58m, and 9 deals worth £35.3m, respectively. Whereas, the next set of investors on the list are only known to have participated in three deals each so far: NEDCF (managed by Maven Capital Partners), North East Innovation Fund (managed by Northstar Ventures), and NPIF Equity Finance (managed by Mercia Asset Management).


Whilst many more Future Fund deals will be announced in due course, why is it that crowdfunding platforms are coming out so far ahead of the rest? Seedrs and Crowdcube also topped the overall list of most active investors in the UK’s high-growth space last year. Seedrs completed 237 deals, including 58 Future Fund rounds, whilst Crowdcube completed 212 deals, including 9 Future Fund rounds. The previously-rival platforms announced plans to merge in October (although this is still under investigation by the Competition and Markets Authority).

We’ve seen an enormous rise in crowdfunder activity since 2011, when we first started tracking UK investments. As a way to raise money from a large number of people, crowdfunding platforms take on the challenge of organising and administering sometimes thousands of investors within a single funding round. With the Future Fund, crowdfunders acted as the lead investor and hence carried out the application process on behalf of individual investors.

Top investor: Seedrs

At present, Seedrs is considerably ahead of the competition in the race to be crowned top Future Fund co-investor. Seedrs is known to have participated in 58 Future Fund rounds, meaning that one in four of their 237 deals last year were Future Fund investments. Starting out as Jeff Lynn and Carlos Silva’s MBA project, Seedrs launched in July 2012, and has since gone on to become a leading European, early-stage equity crowdfunding platform. 

According to Jeff Lynn, co-investing in the Future Fund was very much a deliberate strategy for Seedrs: “we recognised that this would be an important tool in unlocking private capital during uncertain times. We knew that many investors would be inclined to hold back on making high-risk, early-stage investments, at least until the economic impacts of the pandemic were clear, but we also knew that there were many great startups and scaleups that needed cash now more than ever. So we saw the Future Fund as a great way to incentivise more investmentas private investors knew that their capital was getting matched”. 

Jeff also emphasised the importance of the Future Fund being a passive investor, “leveraging the expertise and support of lead investors (like Seedrs) and simply amplifying the capital that each business received”. Commenting on how the fund has supported high-growth companies, he said: “at a time when some businesses’ revenues have taken hits due to lockdowns, or large fundraising rounds have been postponed, that matching capital the Future Fund brings can make the difference in whether the business succeeds… I hope the Government will consider similar public/private financing partnerships in the future because I think this has been a great success.”

Closing thoughts

Whilst early data can give us an idea of which companies and investors have participated in the Future Fund scheme, we still don’t have details on the vast majority (88%) of these deals. We’ll know a lot more about where government funding ended up once these loans convert to equityat which point the UK could have equity stakes in more than a thousand innovative startups.

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