UK Government announces Future Fund: Breakthrough

To be facilitated through British Patient Capital, a British Business Bank subsidiary, the Future Fund: Breakthrough will look to encourage private investors to co-invest with government in high-growth, innovative start-ups, with a focus on R&D-intensive companies.

The government funding scheme, which was mentioned in Chancellor Rishi Sunak’s Spring Budget, will look to aid start-ups that accelerate deployment of breakthrough technologies, develop new medicines, and support the UK’s transition to a net-zero economy.

There will be a minimum total investment round size of £30 million, applying companies must have raised at least £5 million in previous funding rounds, and applications must be made by a lead investor.

This scheme will act as a separate scheme from the Future Fund, which addressed funding challenges faced by UK start-ups due to Covid-19, and is now closed to new applicants.

“With many world-class universities and a strong track record in science and research, the UK is fertile ground for creating high-growth companies based on cutting edge technologies,” said Judith Hartley, CEO of British Patient Capital.

“Through the commercialisation of R&D, these transformative companies will help accelerate the deployment of innovative breakthrough technologies that can transform major industries; develop new medicines; support the transition to a net zero economy and strengthen the UK’s position as a science superpower.

“Future Fund: Breakthrough will enable these R&D intensive companies to raise the patient capital they need to fuel the later stages of their growth, and in doing so, help ensure the UK is a world leader in the industries of the future.”

Commenting on the launch, Tech Nation chief executive Gerard Grech said: “As the potential of technologies like AI, machine learning and quantum computing become fully realised and applied at scale, R&D funding is more important than ever to turn the UK’s new breed of innovators into game-changing market leaders.

“Funds focused specifically on R&D intensive companies aligned to the UK’s strategic sectors, including net zero companies, will help to tackle some of the biggest challenges facing society today.

“It will open up new job opportunities, drive economic growth, and cement UK Tech as world-leading.”

The government is also set to introduce a broader set of measures to increase competition, including new tech visas to attract talent to the UK, and a ‘digital markets unit’ to curtail the dominance of large US corporations like Google and Apple, and open up the market for smaller UK businesses.

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A crucial time for start-ups

With the UK tech sector looking to bounce back from the unprecedented economic downturn at the start of the pandemic, Patrik Backman, CEO and general partner at venture capital firm OpenOcean, believes that the Future Fund: Breakthrough comes at a crucial time for start-ups throughout the country.

He said: “This £375m support fund will help to restore confidence and increase start-ups’ chances of capturing investor attention.

“The success of the Future Fund Breakthrough will be predicated on transparency. In order to provide truly impactful support to the industry and win the trust of start-ups, government will need to be rigorous to ensure a fair process is followed, with clarity on eligibility, application requirements, and open disclosure of which firms have been selected.

“Many in the VC community will welcome the UK government partnering with funds on their investments, helping to level-up the support provided to innovative start-ups and assisting them in maximising their potential. It will be crucial, however, for government to closely cooperate with investors on this journey, ensuring the rights of private investors are respected.

“The firms that best capture government and investor attention will be those who can match a founder’s bold and ambitious vision, with a clear and sustainable roadmap to successfully chart a course into the post-pandemic world.”

More information regarding applying for the Future Fund: Breakthrough, managed by British Patient Capital, can be found here.