The UK Treasury has taken stakes in more than 150 startups through its Future Fund, as an idea spawned as part of the UK COVID-19 recovery plan takes root.
Companies receiving a portion of the £1.1bn ($1.5bn) in funding include a solar power start up, a company that makes protein bars, and a VR gaming company, as well as a photography studio, and a maker of kombucha drinks.
The fund closed its applications at the end of January 2021 and was set up to issue convertible loans between £125,000 to £5m to "innovative companies which are facing financing difficulties due to the coronavirus outbreak."
The government said these convertible loans may be an option for businesses that rely on equity investment and are unable to access other government business support programmes because they are either pre-revenue or pre-profit. These loans would convert into equity stakes at the next funding round if not repaid — with external investors required to at least match the amount the government put in.
The companies which have had stakes converted have been announced, however the Treasury has not divulged companies that have taken convertible loans.
Following the fund's launch in May, 158 largely loss-making companies are now backed by the British government.
Almost 1,200 startups took loans, meaning the chancellor is likely to be left with stakes in hundreds of other companies.
Companies receiving funding include Dice FM, a ticket booking platform, and Credit Laser Holdings, a company that performs credit checks which was the subject of a failed takeover by Experian in 2019. The fund has also backed football team app Footballnet Digital and independent music label Gearbox Records.
The government has not published firm commitments as to how it intends to monetise any investments upon maturity of the loans.
The loan terms provide the Future Fund with the right to transfer any shares arising upon conversion to an institutional investor that is acquiring the whole or part of its interest in a portfolio of similar investments (comprising not fewer than 10 companies).
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