The government has announced the launch of Future Fund: Breakthrough, their new £375 million scheme. Read our brief guide to learn more about the fund and how you can apply.
What is Future Fund: Breakthrough?
First announced in Rishi Sunak’s March Budget 2021, the Future Fund: Breakthrough is a new £375 million scheme that aims to drive investment in innovative UK companies that are R&D intensive and experiencing high growth.
Open for applications from the 20th July, Future Fund: Breakthrough is administered by a subsidiary of the British Business Bank plc, British Patient Capital, and involves the government committing to co-investing with private investors to help increase innovation across the UK.
The investment aims to “incentivise collaboration between (the) most ambitious entrepreneurs and private investors, helping to commercialise breakthrough products such as new medicines and green technologies.”
Who qualifies for Future Fund: Breakthrough?
To qualify for the fund, businesses’ must:
- Be UK based and looking for at least £30m to fund further development work.
- Have commitments of 70% of a funding round from private investors.
- Show that they’ve raised £5m without help from the state, indicating that they’ve already grown exponentially.
- Have at least half of its employees based in the UK and at least half of its staff conducting R&D based in the UK.
- Show R&D accounts for 10% of all operational costs over the past 3 years or 15% for one of the past three years.
How does the Future Fund: Breakthrough work?
The companies themselves will not apply. Instead, their lead investor will make the connection between the business and the future fund. To apply, they must complete an online form application and prove their eligibility as the lead investor. Here is the eligibility process:
- The British Patient Capital assess the eligibility of the lead investor
- The lead investor introduces the potential investee company to British Patient Capital
- British Patient Capital assess the companies eligibility for Future Fund: Breakthrough
- British Patient Capital then evaluates the investment opportunities
- The British Patient Capital Investment Committee then makes the decision.
Which industries are the government targeting?
The government will favour ‘breakthrough’ technology companies in major industries like quantum computing, life sciences and clean energy. They hope that investing in these key industries will help solve some of the world’s greatest challenges.
Judith Hartley, The Chief Executive of British Patient Capital, hopes the new scheme will ‘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.’
The chancellor, Rishi Sunak, will also host a Treasury Connect tech conference in East London in September to bring together investors and business leaders in tech. The aim is to encourage private sector investment in innovative firms.
Sunak said: “Our future Fund: Breakthrough scheme will enable innovative businesses in every corner of the UK to access the finance they need to scale up and bring their transformational technologies to market.
“Technology and innovation will be at the heart of our future economy, which is why we are investing billions in R&D to help cement our status as a world-leader in this field.”
Part of the government’s aim to increase investment in innovation
Separate from the government’s Future Fund, launched in April 2020, it provided convertible loans of up to £5m to a variety of UK innovative companies, the Future Fund: Breakthrough is part of the government’s efforts to increase investment in innovation to 2.4% of economic output by 2027. And they’ve already spent £14.9 billion on R&D in 2021 to 2022, which is the highest level in four decades.
To learn more about the major forms of government funding available to innovative businesses of every size, have a read of our government funding guide.