We believe in investing in the people and the companies which will shape our future economy and environment.
We welcome the Government’s launch of the Future Fund which will help fundraising by companies which don’t qualify for CBILS or other schemes because they are not yet meeting the criteria for the schemes aimed at helping more mature businesses.
The loans available under the scheme are convertible into equity, so it’s important for companies looking to take advantage of the scheme to engage with advisors such as the Lupton Fawcett team who have knowledge and experience of the funding trajectory of high growth businesses.
The scheme also requires matched funding from private investors, be they venture capital funds or angel investors. Again companies will need advice from professionals who know how to co-ordinate co-investment by multiple parties and, indeed, where to look for suitable private investors who can come in and so unlock access to the future fund.
The scheme will not help very early-stage companies, because one of the requirements is that the company must already have raised at least £250k from third party private investors in the last 5 years. The thinking maybe that very early stage projects can be moth-balled for the duration. This Fund is to support those companies that are up and running and are burning cash which will be exhausted unless further funding comes in.
The terms around interest rates, redemption and conversion of the loans under this scheme are quite complex.
The terms required by the Government will be not less than those given to the private investors and as a minimum, the interest rate will be 8%, the conversion will be at a 20% discount to the price of the next funding round and the redemption premium 100%. This is not cheap money but rather reflects the typically high-risk nature of early-stage funding.
Getting this funding in place is going to be technically much more demanding than accessing CBILS or the job protection furlough funding. It can only be done with expert help. We are here to provide that help using our full range of flexible pricing options to help deliver value.
If you would like to know more please contact Jonathan Oxley, Chairman and Corporate Finance Partner on 07801 316179 or at Jonathan.firstname.lastname@example.org.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.