The government has opened applications for the Future Fund. The £250 million fund, which is intended to provide financial support to innovative start-ups in the UK, will launch today (Wednesday 20 May 2020). We published details of the headline terms of the fund in a recent Legal Update. But the launch of the scheme has allowed us to clarify some of the unknowns.

How to apply?

Applications for the fund are now open and the process is investor-led. This means that the investor, lead-investor or group of investors must make the application on behalf of an eligible company via an online portal.

The funding will be made available on a first-come-first-served basis. Applications for the fund are to remain open until 30 September 2020.

As part of the application, the company will need to nominate a firm of solicitors to facilitate completion.

Has company eligibility criteria been confirmed?

In addition to the known eligibility criteria (as detailed in our previous update), the Government has confirmed that the company must also meet the following:

  • the company must have been incorporated on or before 31 December 2019
  • the company must have at least one of either i) half or more employees based in the UK; or ii) half or more of its revenue from UK sales

Are the terms negotiable?

It is envisaged that both the investors and the Future Fund shall invest using a standardised convertible loan agreement.

There may be negotiation on the following commercial points:

  • the interest rate (which will be at a minimum rate of 8% per annum)
  • the discount on conversion of the loan (which will be at least 20%)
  • the ability to obtain further funding on the same terms within 3 months of completion
  • any valuation cap at the point of conversion

Can investors claim SEIS and EIS relief?

The Future Fund scheme will not allow investors to benefit from SEIS or EIS relief. But the Government has confirmed that existing SEIS and EIS investments should not be affected by any future conversion or redemption of the loan.

How can Brodies help?

Our corporate lawyers are familiar with the terms of the Future Fund and would be happy to assist investors and companies who are considering such investment.

If you have any questions about this or any other matter relating to your business, please get in touch with any member of the corporate team or your usual Brodies contact.


Derek Stroud


Bruce Stephen

Head of Banking and Financial Services & Partner

Alasdair Dunn

Senior Associate