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NEWS: New £375 million scheme to drive innovation investment is launched

Posted on August 4, 2021

A new £375 million scheme to drive investment in innovative forms of the future is now open for applications. The scheme called Future Fund: Breakthrough aims to drive growth in the UK’s most innovative and R&D intense companies, to supercharge the UK’s post-pandemic economy. The UK is looking to position itself as a scientific superpower, and the Future Fund scheme aims to create skilled jobs and build a future economy.

“Technology and innovation will be at the heart of our future economy which is why we are investing billions in R&D [research and development] to help cement our status as a world leader in this field.” – Rishi Sunak (Chancellor)

Bringing high-quality, transformational technologies to the market will not only benefit the investors and entrepreneurs but society in general. Firms that are looking to raise a minimum of £30 million worth of investment and already have commitments of 70% of an investment round from private investors will meet the criteria for the scheme. The companies that will be funded will all have similar goals: to solve some of societies greatest challenges.

The requirements for the Company claiming for this scheme are:

          The company needs to be UK-based (UK incorporated)

          Have significant UK operations (at least half of the company’s employees and research employees must be based in the UK)

          Be carrying out R&D activity in the UK such as spending at least 10% of operational costs on R&D

          Developing intellectual property in the UK is projected to be the main source of income

          Intend that 20% or more of all employees will be carrying out research for at least 3 years from the date of investment in roles that require a master’s degree or higher.

          Have raised over £5m of equity investment from third party equity investors from the past 5 years.

In terms of the lead investor who will be the one applying for the scheme, they must be a new or existing investor, they do not have to be the largest investor in the round, but they must meet one of the 3 criteria regarded for the scheme such as:

          Any fund managed or advised by an FCA (or equivalent) authorised firm with private sector investment making up greater than £100m.

          Any fund or investment vehicle with an appropriate investment strategy, managed or advised by a fund manager which has applied to and obtained an investment from the British Business Bank group.

          Other investment vehicles like a minimum of £100m of investment capital, a broad range of investors (at least three), a demonstrable track record and an appropriate investment strategy where these have been approved by Future Fund: Breakthrough.

 

Due to the nature of the projects involving elevated research and development costs, breakthrough technology companies commonly have a propensity to require more capital than other industries. This is due to their ability to grow rapidly and have a very significant economic impact, all while taking immense risks. Eventually, the British Patient Capital will build a portfolio of growth-stage breakthrough technologies over time, assisting us in the journey to becoming a scientific giant.

Some of the main industries of focus that the scheme will stretch across are:

          Life sciences

          Quantum computing

          Clean technology

Private companies will make up the bulk of the investment, with applicants required to prove their 70% funding round and that they have been able to raise £5m previously without state assistance to show that they are already a growing business. The lead investors will be required to apply for the business to receive the fund, instead of the business doing it themselves.

The scheme will also ask lead investors to sign the Treasury’s Investing in Women Code which commits to improving female entrepreneurs’ access to tools, finances and resources.

To find out more go to: https://www.gov.uk/government/news/new-375-million-scheme-to-drive-investment-in-innovative-firms-of-the-future-opens-for-applications

Green Jellyfish are specialists in R&D Tax Credits, to learn more go to: https://www.greenjellyfish.co.uk/