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Dozens of bailed-out tech start-ups miss deadlines to repay Covid loans

British Prime Minister Rishi Sunak
As of March 2023 Rishi Sunak's pandemic-era fund had lost £289m - Phil Noble-WPA Pool/Getty Images

Almost 100 loss-making businesses bailed out by Rishi Sunak’s pandemic fund have missed deadlines to repay loans, raising further questions about whether the taxpayer will make a return on the £1.1bn scheme.

Figures from the Future Fund, which was set up in 2020 to provide emergency financing to start-ups, show that 97 companies have been granted extensions on the three-year loans since last summer.

It comes after fears that the strict terms of the loans would tip hundreds of small companies into bankruptcy.

The Future Fund provided £1.1bn to 1,191 loss-making companies in 2020 and 2021.

The funding came in the form of convertible loans, which turn into shareholdings when a business next raises money.


The scheme has left the taxpayer with an assortment of stakes in hundreds of companies that are typically backed by high-risk venture capital.

Although officials had been confident that the scheme would ultimately result in a profit for the taxpayer, figures last year revealed that the fund had lost £289m as of the end of March.

Figures published by the British Business Bank (BBB), which administers the fund, show that 62 of the 1,191 companies had been sold at the end of December, resulting in a cash return for the fund.

Almost 700 of the loans have been converted into equity stakes.

A total of 173 companies had gone insolvent, while 260 loans were outstanding – including the 97 which had extended their repayment periods.

In nine of these cases, the companies have since raised funds, been sold or gone bust.

The number of companies forced to extend the loans suggests that many of the businesses are struggling to raise cash.

Extending loans requires signing up to more onerous terms that give the Future Fund a significant discount should the borrowing ever convert to equity.

Multiple start-ups supported by the fund had raised concerns that the original three-year deadlines for paying back the loans would drive firms into bankruptcy.

Extending the loans by up to two years will grant them a stay of execution but could mean the fund getting back less money if the borrowing company goes bankrupt later on.

One lawyer dealing with start-ups that have borrowed from the Future Fund said he was surprised by the number of companies extending loans because the terms for doing so are “quite punishing” but he conceded that many had no choice.

He said that several founders were financing funding rounds themselves in order to meet the original terms of the loans. “It’s not a good environment [for raising new money],” the lawyer said.

The fund has attracted attention in part because of the eclectic group of companies it has ended up owning stakes in, including a sex party business and Bolton Wanderers Football Club.

Newly disclosed companies include Wheely, a luxury ride-hailing company, and a theatre company run by the West End producer Jamie Hendry.

An independent report into the fund last year found that it suffered higher rates of failure and grew more slowly than a control group of similar companies.

The fund’s ultimate fate is unclear. Investors have expressed interest in buying it in the past, although this is seen as unlikely until all loans are resolved.

A British Business Bank spokesman said: “Where the extension application is from a company that has the support of other CLA lenders, is not in default of its obligations under the CLA agreement, passes our customer due diligence checks and is solvent, then the Future Fund will agree to an extension. This is true for almost all applications.”