The government’s flagship fund for supporting startups through the COVID-19 crisis has nearly run out of cash just four weeks after opening for applications.
Figures published by the British Business Bank and the Treasury on Tuesday show the Future Fund has now lent £236.2m ($295m) to 252 businesses.
The Future Fund launched on 20 May with £250m of government cash to lend. It only backs business that have “matched” funding from a venture capital investor, meaning the fund should facilitate £500m of investment in startups.
Tuesday’s figures suggest hundreds could be left disappointed, potentially pushing many to the brink of collapse. The Treasury’s figures show the Future Fund has 371 applications outstanding, with just £13.8m left to invest.
Chancellor Rishi Sunak has said he will look to expand the Future Fund if necessary but so far no announcement has been made by the Treasury. The fund is due to be operational until September 2020.
A spokesperson for the Treasury said: “We are backing innovative firms with a comprehensive package of support, including the Future Fund to provide capital to high-growth companies.
“The initial £250m for the fund was an indicative figure, and we have always said more can be made available if needed.”
The state-owned British Business Bank, which runs the Future Fund on behalf of the Treasury, on Tuesday published limited details of where the cash is going for the first time.
Some 80% of startups backed by the fund have a mixed gender management team, while 50% have a mixed ethnicity management team. 45% of the cash is going to startups based outside of London.
Deborah Okenla, founder and CEO of YSYS, a recruiter that helps startups improve diversity, said the fact data was being published was “positive” but said the fund still had “a long way to go”.
19% of Future Fund cash went to startups ran solely by men and almost 40% of cash went to teams will all-white management teams.
“While the scheme was not set up to address wider well-known structural issues in the UK’s equity finance market for smaller businesses, I’m delighted to see this early evidence of the diversity in the management teams of the Future Fund companies,” said Keith Morgan, chief executive of the British Business Bank.
The Future Fund was set up to support innovative and fast-growing companies that were loss making survive the COVID-19 shutdown. The Fund has not disclosed the names of any startups it has backed, citing commercial terms. The decisions has led to questions over the government’s transparency.
Yahoo Finance UK has identified several of the first batch of firms to gain funding from the Future Fund. They include a vegan restaurant, a ‘craft’ soft drinks maker, and a hydrogen-powered car company.