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image of pan simmering | accountingweb | Future Fund controversy bubbling up as start-up collapses mount

Future Fund doubts simmer as start-ups collapse


Start-ups that received millions in taxpayer cash through a government scheme to prop them up during the pandemic have collapsed, prompting concern many more could follow.

3rd Apr 2024
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It has emerged that more than a hundred Future Fund recipients could go under, having missed a deadline to repay the bail-outs they were handed.

The most recent to enter administration is a group part-owned by Nova Group Holdings, a start-up investment group backed by former Tesco CEO Sir Terry Leahy.

Companies House papers filed on 30 March by administrators from McTear Williams & Wood said the group, which benefited to the tune of £9m, is now “insolvent” after the British Business Bank called in their loans.

Around 100 other small businesses that took advantage of the Future Fund have also missed deadlines to repay the state-owned lender, and may now follow Leahy’s group into liquidation.

Experts have cast doubt on whether the government will make a return on the £1.1bn scheme.

Emergency financing

The Future Fund, launched in 2020, granted convertible loans, which turn into shareholdings when a business next raises money. Loans had to be match-funded by private investors.

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Replies (9)

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By FactChecker
03rd Apr 2024 23:34

Really just two (printable) thoughts:

1. Why did a scheme, intended to "support innovative SME businesses through the COVID-19 pandemic", put money into a group part-owned by .. a start-up investment group?
[If such a vehicle doesn't know how to raise convertible loans they should go out of business.]

2. If public money is to be invested (which is what this was meant to be) in truly innovative young businesses, which are therefore likely to be high risk (else there's no need for the scheme), it should be focussed on areas intended to bring benefits to the majority of the population in the long-term (e.g. fusion energy, life-saving drugs, national food independence, clean water or whatever).
[Of course that begs the question as to why the govt doesn't just set it up as a nationalised business.]

Thanks (10)
Replying to FactChecker:
By johnjenkins
04th Apr 2024 09:37

The question is also how many of these "start ups" were genuine?

Thanks (6)
Replying to FactChecker:
By Rob Swan
04th Apr 2024 10:45

Having sold (pretty much) everything off the the 'private sector' - supposedly so they can 'attract necessary invetment' - what the 'hedgehog sandwich' is the government doing 'investing' in the private sector?
Stupidity exceeding expectations on oh so many levels!

Thanks (0)
By AndrewV12
04th Apr 2024 10:24

Just how bloody naive and stupid is this current Government.

Some thing else to chuck on the national debt.

'Experts have cast doubt on whether the government will make a return on the £1.1bn scheme.' I am not an expert but I can tell you the chances are remote.

Thanks (4)
Replying to AndrewV12:
By Rob Swan
04th Apr 2024 10:48

I do believe, as yet, there is no appropriate measure for the naivete and stupidiy of the government, be it this one or any other over the last 40 years.

Thanks (1)
By Paul Crowley
04th Apr 2024 11:25

No business needs public money, if it does then it is not a business. Public money should be used for the benefit of citizens.

Thanks (7)
Replying to Paul Crowley:
By moneymanager
05th Apr 2024 08:22

Yes, very national and for the benefit of society, I think someone already had that idea which of course is why he had to go.

Thanks (0)
By flightdeck
04th Apr 2024 17:17

VCs and PEs are skilled at spotting investment opps and risks and nursing them, jigsawing them with their ecosystem and moving start-ups along the path to being something viable or offloading them at a suitable time to limit losses. The government and whatever hodgepodge of civil servants it cobbled together to oversee this have not one atom of expertise.

It may have been a good idea to "get behind UK innovation" but the lack of expertise means they could not evaluate applicants nor evolve them.

Thanks (3)
By moneymanager
05th Apr 2024 08:52

The Guardian ran a piece on this in Feb 2023
, the G refers to the defunct New Craftsmen firm as a furniture company, a little research showed it as only being a marketing agency for the people who supposedly made the furniture, it neither bought nor sold anything, quite how a new 'marketing agency' can burn cash like this accidentally defeats me, perhaps it was deliberate; call me a cynic, but I think a probe would find that very high payments wrre made for such as 'services supplied by less than arm's length entities.

Thanks (3)