Early Stage Company Funding: Future Fund Deadline Extended

Tuesday 27th October, 2020

What is the Future Fund?

The UK Government’s co-investment “Future Fund” programme, launched on 20 May 2020, is the scheme under which the UK Government matches private investment with state-backed convertible loans ranging from £125,000 to £5 million. There is no cap on the amount that the matched investors may loan to the target company.

According to data released on 20 October 2020, the Future Fund has approved over £770 million of Future Fund loans to 745 innovative technology businesses across the UK. Marriott Harrison has advised on multiple Future Fund investments since its inception.

When is the new deadline for applications?

The good news for qualifying companies and investors is that the deadline for applications under the Future Fund has been extended. It will now remain open for new applications until 30 November 2020.

Marriott Harrison has spoken to the Future Fund which has confirmed that a company that has previously successfully secured funding under the scheme will not be eligible to make a second Future Fund application. However, companies that have secured funding under the Future Fund will still be able to take advantage, to the extent they are applicable, of the UK Government’s other Coronavirus business interruption loan schemes, which also end on 30 November 2020.

How do I apply and what else do I need to know?

The investor, or the lead investor of a group of investors, must make the application online through the Future Fund portal, which is then approved by the investee company. Expect a minimum of 21 days from submitting the application to completion of funding, if successful.

Key CLA Terms

 The Future Fund and investors both invest in the target company using a convertible loan agreement (“CLA”). The CLA is a standard form document and, other than a few specific clauses, is not negotiable (a copy of the CLA can be found: here).

The key terms of the CLA are as follows:

  • Conversion: the loan converts into shares in the company in certain circumstances, including on an exit or as part of a new funding round. The conversion discount on the equity value is 20%.
  • Interest: the loan has an interest rate of 8% per annum (non-compounding), is non-repayable during the term and accrues until the loan converts or is repaid.
  • Term: the loan matures after 36 months if it has not converted beforehand. It cannot be repaid early by the company without the agreement of all investors.

Company and investor eligibility 

To be eligible for the scheme, the company must meet the following criteria:

  1. The company must have been incorporated on or before 31 December 2019.
  2. The company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years.
  3. If the company is a member of a corporate group, it must be the ultimate parent company.
  4. The company does not have any of its shares or other securities listed on a public market (such as the London Stock Exchange).
  5. The company must have either (i) half or more of its employees based in the UK; or (ii) derive half or more of its revenues from UK sales.
  6. The company must be a UK-incorporated limited company or in certain circumstances, among other criteria, a non-UK company if it was incorporated for the purposes of participating in an accelerator programme outside the UK.

An investor must either be an investment professional, a self-certified sophisticated investor or a high-net worth individual or company.

For advice in relation to the Future Fund, please contact any member of the Marriott Harrison team.


This article is current as of the date of its publication. The information and any commentary contained in this article is for general information purposes only and does not constitute legal or any other type of professional advice.  Marriott Harrison LLP does not accept and, to the extent permitted by law, excludes liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this article.

Articles by Andrew Ross