The UK government is expanding its COVID-19 support for startups, offering more cash and extending the eligibility criteria to firms with headquarters overseas.
The Treasury announced on Tuesday it would now allow its Future Fund to back companies that contribute to the UK economy but don’t have a UK-based parent company. The adjustment means many startups that took part in overseas accelerator programmes, which help kickstart their development, can now apply for funding.
The British Business Bank, which operates the Future Fund, said it will carry out more in-depth checks on applications from overseas companies to ensure public money is not being misused.
As well as an extension to its remit, the Future Fund is also being handed more cash to invest. The government initially allocated £250m ($307m) to the Fund but that was almost used up after just a month of operations. Launched in May, the Fund is due to run until September.
The British Business Bank didn’t specify how much additional cash it was getting but said the Treasury was keeping the Fund “under review.” Already, £320.6m has been allocated to 322 startups, suggesting additional cash has already been received.
Businesses applying for funding must have it “matched” by a venture capital investor, meaning the Fund has so far facilitated around £640m of investment into UK startups.
The Future Fund invests in startups through convertible loans — debt which turns into shares in a company if it can’t be paid back. The method means the government is likely to end up with stakes in many of the startups it backs.
The British Business Bank and the Treasury are refusing to name the startups backed by the Future Fund, citing commercial terms. Yahoo Finance UK has uncovered some of the first names to receive cash from the Fund. They include a vegan restaurant, a craft soft-drinks maker, and a wind farm project.
In a separate report out on Monday, some of the smallest UK fintech companies have a cash runway — the length of time in which a company will remain solvent — of six months or less and are turning to government support as they suffer from the economic fallout of the COVID-19 pandemic.
According to a survey by industry body Innovate Finance, over three-quarters of start-ups with 25 employees or less have applied or intending to apply for one of the government support programmes designed to keep businesses on their feet amidst the crisis.