Jenny Tooth comments on the launch of the Future Fund and the new £750m Innovate UK grants and loans

Well as we have enjoyed some sun with lock down easing a little, we have seen the much awaited and much debated £250m Future Fund finally open its doors this week. It is certainly a welcome scheme for many growth focused equity-backed businesses seeking to continue to build and scale. However, for Angel and early stage investors wishing to make matching investments using their EIS tax reliefs alongside the Convertible Loan Notes of between £125k and £5m, there is certainly a lock out!

There is however some comfort for those investors willing to forego the tax reliefs in order to access valuable matching loans, convertible to equity within three years, since the Chancellor has agreed that they will find a way to ensure that previous and following EIS investment rounds would not be jeopardised, though the devil may be in the detail. Nevertheless, I do advise all those investors wishing to pursue a Future Fund loan and feel they can bring matching funds that meet the criteria, to make their application fast through the portal managed by British Business Bank. Demand is likely to outstrip supply, with many VCs having lined up their investment details over the past few weeks in anticipation. Its first come first served!

This leaves our community still without a dedicated solution and as I have explained, Treasury has no mind to change the State Aid rules to offer a bigger tax break this time. We remain in search of an appropriate and acceptable, but speedily deployed measure and we will be further exploring a co-investment model, building on existing schemes, as well as enhanced R&D tax breaks, among options. As I have said before there is no one panacea for the needs of angel and early stage investors. Most importantly, we need a long term not just a short-term solution to ensure that we can build and grow an effective angel ecosystem to enable the angel and early stage community play their part in enabling resilience and economic recovery. As we think about the solutions that will catalyse the growth and effectiveness of angel and early stage investing, we especially need to ensure we can address some of the existing structural issues concerning regional and gender disparity of access to capital.

Supporting growth and Innovation and exploiting the potential of female entrepreneurship was a key subject of a Virtual Roundtable that I moderated with a panel of fantastic women investors and funders on Tuesday. They showed that female investors have a huge passion to help innovating businesses, many of whom were led by women, bringing exciting innovative solutions to address COVID-19 challenges and that there was a strong appetite for more investing. We need to use this time to recruit many more women to invest in this space.

Many of you may be aware of the new £750m Innovate UK grants and loans recently launched to address COVID-19 challenges and enable innovators to further support their commercialisation objectives. For those wishing to know more, we have invited Dr Ian Campbell Executive Chair of Innovate UK, to be in conversation with me on a webinar next Friday 29th to tell us more about Innovate UK’s support package and how this can boost early stage investment.

For those of you who may be interested in seeing how Angels are reacting to the pandemic across Europe, you might like to the article in FT Sifted this week in which I make a few remarks. It’s instructive to see what interesting support measures have been put in place for Angel Investors and start-ups in other Member States.

We are certainly not out of the woods yet and I can assure you I will continue to work on your behalf to ensure our community can get the support needed for now and in the new post COVID future. Do keep me informed of your views and comments.

Enjoy a well-deserved long weekend and keep well and safe.

By UKBAA21 May 2020