Tuesday 2 February 2021 7:07 am

Future Fund: Early-stage startups missed out on funding

Startups in their earliest stage missed out on funding with the majority of the government’s Future Fund investment going to companies at a venture or growth stage. 

The Future Fund was launched in May to provide support to startups ineligible for the government’s other support schemes. 

It was designed to provide support to startups through government loans ranging from £125,000 to £5m, subject to match-funding from private investors. 

Between May 2020 and January of this year 1,337 eligible investments took place in nearly 1,200 companies. 

But a breakdown of the data by Beauhurst reveals just 28.5 per cent of the investment went to seed stage firms. More than half – 53 per cent – went to those at the venture stage while growth stage and established companies accounted for 13 and 5 per cent of investments respectively. 

Mirroring the national picture, half of the 664 London based startups receiving government support were at venture stage. This compares to a measly 181 of the capital’s earliest stage startups. 

Critics argued that the terms favoured investment from venture capital firms, freezing out private investors that play a critical role within the investment landscape. 

At the time one investor warned City A.M. that the Future Fund would be used by a “core number of VCs most likely investing into their existing companies.” 

Startups in London and the South East accounted for the majority of investments, with 664 and 140 deals respectively. Northern Ireland saw a measly 11 deals while just 17 startups in the East Midlands secured funding.