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Rishi Sunak’s startup fund pulls the plug on dozens of companies

Prime Minister Rishi Sunak looking downwards and very glum
Future Fund, championed by Rishi Sunak when he was chancellor, has long faced questions about its profitability - PA/Benjamin Cremel

Rishi Sunak’s Covid start-up fund has pushed dozens of companies into liquidation in an attempt to recover taxpayer loans.

The Future Fund has issued winding up petitions to 32 companies that it backed during the pandemic, according to court records.

In many cases it has resulted in the business being ordered to cease trading by courts and the company wound up without the fund recouping its investment.

The Future Fund was championed by Mr Sunak in 2020 when he was chancellor as a way to support loss-making start-ups during the pandemic, but has faced questions about whether it would make a profit.

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It lent £1.1 billion to 1,191 companies on three-year terms, with the loans converting into shares when the businesses raised a “follow-on” investment. If the companies did not raise further investment they were required to repay the loans back double and with interest.

With the loans now maturing, the fund has taken some companies to court to recover investments of up to £5 million, issuing winding-up petitions – an attempt to force a company into compulsory liquidation.

Of 32 cases since the end of 2022, 23 taxpayer-backed companies have been placed into administration or liquidated.

They included AiSolve, a virtual reality company that owed £11.4 million; the investment app Dabbl; and companies supported by Nova Group, a start-up investment business backed by former Tesco boss Sir Terry Leahy.

A spokesman for the British Business Bank, which operates the fund, said it had “a duty to protect the interests of taxpayers”. The bank said it had granted extensions to the majority of companies that requested them rather than demand repayment.

Sir Terry Leahy,  former Tesco boss
Sir Terry Leahy's investment group supported some of those companies that have been placed into administration or liquidated - Andrew Crowley

“Of the companies with loans outstanding at their maturity date not every company has applied for an extension,” a BBB spokesman said. “Of those that have applied for a loan extension, not all applications have been successful.

“We have a duty to protect the interests of taxpayers. When companies get to the maturity date and their loans remain outstanding, we will take steps to recover funds, which may include seeking to wind up companies. We will work with liquidators to assist their investigations and their efforts to recover assets for creditors.”

At the end of March, the Future Fund had converted 712 loans into stakes in companies, and 211 loans were outstanding. A total 202 companies have become insolvent, while 66 have resulted in cash returns for the fund. Last year, the BBB said the fund had lost £289 million on a fair value basis.