All defined terms are set out in the Glossary of Terms.
These FAQs are provided for informative purposes. They are not intended to provide advice of any kind (including legal, financial, tax or other professional advice). You should seek professional or specialist advice before doing anything on the basis of this content.
What are the changes to who can apply to the Future Fund?
The Future Fund requires the borrower to be the ultimate parent company and for that ultimate parent company to be UK-incorporated. However, companies which have substantial UK economic presence but have been required to incorporate their ultimate parent company in a non-UK jurisdiction solely in order to participate in an Accelerator Programme (in accordance with the terms and conditions of that Accelerator Programme or any other agreement entered into by the Company on entry into the Accelerator Programme) did not previously qualify for the Future Fund. The scope of the Future Fund is being extended to provide an application route for funding from the Future Fund for such companies, provided they meet certain eligibility criteria.
What are the eligibility criteria for this category of company?
A non-UK ultimate parent company (“the Company”) of a corporate group (“the Group”) which participated in an Accelerator Programme may be eligible for the Future Fund, provided that it satisfies the following criteria:
- the Company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive);
- if the Company is a member of a corporate group, it must be the ultimate parent company;
- the Company is the equivalent of a UK limited company in the relevant non-UK jurisdiction;
- the Company does not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue;
- it participated in an Accelerator Programme, on or before 19 April 2020, and participation in the Accelerator mandated incorporation of the ultimate parent company in a non-UK jurisdiction;
- if the Group (or any entity within the Group) was in existence before the Company was incorporated, the ultimate parent company of the Group (or the sole entity, if applicable) must have been incorporated in the UK
- the Company is the ultimate parent company of a Group which has:
- half or more of its employees based in the UK; or
- half or more of its revenues from UK sales;
- it is the ultimate parent company of a group which contains at least one subsidiary operating company incorporated in the UK on or before 31 December 2019 and
- the Company received investment from the Accelerator Programme on or before 19 April 2020.
To protect the use of public funds, all applications will be assessed against UK Government investment standards on specific jurisdictions by reference to factors such as sanctions, tax transparency, and the cost and complexity of implementation. The UK Government will also take into account concerns around the proper use of public finances and wider public policy risks, as well as whether investment would undermine the integrity or public credibility of the Future Fund.
What is an Accelerator Programme?
For the purposes of eligibility, “Accelerator Programme” shall mean a selective, fixed-term, cohort-based programme for early stage companies, which provides seed or venture capital investment and access to mentorship and other professional support. The Accelerator Programme must:
- have been subject to an open and competitive process (i.e. participant companies were required to formally apply in writing for the programme and were selected following a competitive assessment process against other applicants); and
- as a condition for participation in the Accelerator Programme, as evidenced by the terms and conditions of the Accelerator Programme at the time of the Company’s participation in the Accelerator Programme or any other agreement entered into by the Company on entry into the Accelerator Programme, have required the ultimate parent company of the Group to be incorporated in a non-UK jurisdiction.
How much does the Accelerator need to have invested in the Company and does this count towards the £250,000 needed to have been raised in equity?
There is no minimum investment amount required to have been made by the Accelerator Programme, provided that any investment was made on or before 19 April 2020 and that the investment was made in the context of the Company’s participation in the Accelerator Programme.
Only new shares issued by the Investee Company, and subscribed for by third party investors, will count towards the £250,000 threshold. Share transfers will not be relevant to this criterion.
How long will the process take?
The assessment of an application involving a non-UK parent company will require time to complete in order to assess and review any jurisdiction-specific documentation received and carry out any additional structure, diligence and KYC checks that may need to be undertaken manually over and above the provisional checks we ordinarily carry out. We therefore cannot estimate a time period for completion of the assessment at the outset. We do however aim to process applications as quickly as possible.
How will UK presence be proven?
The eligibility criteria require that the Company is the ultimate parent company of a Group which has:
- half or more of its employees based in the UK; or
- half or more of its revenues from UK sales.
As part of the application process, the Company will be requested to send a copy of its group structure containing details of employees as at that date and revenue by group company, certified by a Director of the Company.
Is the ‘limited company’ structure requirement still relevant for a non-UK ultimate parent company?
Yes. We appreciate that the non-UK jurisdiction in which the Company is incorporated may not use the same taxonomy as the UK, however to be eligible for the Future Fund the Company must be an entity which is equivalent to a UK limited company in that non-UK jurisdiction. For example, sole traders, partnerships, LLPs and unincorporated bodies are not eligible, nor are companies whose shares are traded on public exchanges.
Is there a list of qualifying Accelerator Programmes?
To determine whether an Accelerator qualifies, applicants should consult the definition of Accelerator Programme contained in the eligibility criteria to check whether the programme that they participated in is likely to meet the requirements set out in the definition.
Can the Company be incorporated anywhere in the world?
Subject to meeting the criteria for eligibility there are [at the outset] no specific constraints on the jurisdiction in which the Company may be incorporated. However, to protect the use of public funds, all applications will be assessed against UK Government investment standards on specific jurisdictions by reference to factors such as sanctions, tax transparency, and the cost and complexity of implementation. The UK Government will also take into account concerns around the proper use of public finances and wider public policy risks, as well as whether investment would undermine the integrity or public credibility of the Future Fund.
How will the CLA work for non-UK parent companies?
The Future Fund is built around a standard-form CLA which applicants will be required to enter into in order to allow for a simplified, standardised process. However, certain terms of the CLA, including the interest rate, conversion discount, headroom amount and valuation cap are negotiable between the Investors (other than the Future Fund) and the Investee Company in advance of Application. However, the interest and discount rates cannot be lower than 8% and 20% respectively. If no headroom amount or valuation cap is agreed, they will default to zero and void, respectively. This applies to all applicants to the Fund.
In the case of applications relating to a non-UK parent companies, the jurisdiction specific CLA will be shared with an applicant in a particular jurisdiction during the course of their application process. Applicants will be given due time to review the CLA whilst their application is processed.
How does the application process for those who fall into this category work? Is there a special application form I need to complete?
The Future Fund is an investor-led application process. This will continue to remain the same for applications relating to non-UK parent companies. There are certain differences in the application process for those in this category including the eligibility criteria checks and verification, by a director of the Company, of the Group’s UK substance.
The scheme details require the use of a UK regulated solicitor at the settlement stage. Does this also apply in the case of non-UK parent companies, or can a foreign lawyer in another jurisdiction perform this role?
No, a UK regulated solicitor will continue to be required in order to complete the final stage of the settlement and transfer of funds process. Information about the role of the solicitor.
What information or paperwork will be needed to support the application?
The required information to start the application by the lead investor includes the details required for all other applications under the scheme. View a list of required information.
However, there may be additional documents and/or confirmations required for non-UK ultimate parent company applications, including:
- evidence that the Company participated in an Accelerator Programme which satisfies the relevant eligibility criteria;
- evidence that the Accelerator Programme in which the Company participated in required the Company to be incorporated in a non-UK jurisdiction. This can be evidenced by the terms and conditions of the Accelerator Programme at the time of the Company’s participation in the Accelerator Programme, any other agreement entered into by the Company on entry into the Accelerator Programme, or a signed letter from a senior counsel/manager at the Accelerator Programme confirming the Company’s participation and that it was required to incorporate its ultimate parent company in a non-UK jurisdiction;
- additional certifications provided by a director of the Company that the Company meets the UK substance test (i.e. half or more of its employees being based in the UK or half or more of its revenues being from UK sales), as set out in the eligibility criteria; and
- other additional documentary requirements at the sole discretion of the Future Fund.
Will the Future Fund be collecting management information?
All successful applicants will be required, as set out in Schedule 4 of the CLA, to submit quarterly information via an online portal for portfolio monitoring purposes.
In addition, the Future Fund is collecting data on the diversity of companies to enable us to monitor the diversity of the Applications we receive. The Application asks for the gender mix and ethnicity mix of the management team and the region where the company is based. Providing gender mix and ethnicity mix data information is optional (region is given by the company address).
The Future Fund and British Business Bank will anonymise and aggregate this data and plan to publish it to contribute to increased transparency of the investment markets.
What currency will the funds be made payable in?
The investment from the Future Fund will be made in pounds sterling. All investments being made by the Investors will also need to be made in pounds sterling.
Is there any restriction on the currency of previous funds raised to meet the £250,000 criterion?
Previous investments need not have been made in pounds sterling; however, the aggregate investment amount needs to be the equivalent of £250,000, calculated by reference to the exchange rate at the time of each investment.