UK Future Fund ‘s Millions Wasted on Failed Firms

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Rishi Sunak’s Future Fund loan programme was intended to support UK startups during the pandemic, but instead channelled funds to faltering or well-established companies. The fund, which was introduced in April 2020, provided businesses with loans ranging between £125,000 and £5 million, which would be converted into equity upon the next capital raise. Also required to invest in the businesses were private investors. Almost £90m was lost on the £1.14 billion invested in Future Fund companies; 107 investments, or 10% of the total, went insolvent. The failure of 92 companies left the taxpayer on the line for £78.4 million.

The plan was met with opposition from the inception

In a letter to ministers dated May 2020, Keith Morgan, chief executive officer of the British Business Bank (BBB), which administered the scheme, voiced concerns that the programme would only attract companies unable to raise capital elsewhere. According to the minutes of a board meeting, the fund posed a risk of creating “zombie businesses” sustained by tax dollars. The fund was intended to assist entrepreneurs in surviving the pandemic, but 29 of the 107 companies that failed were founded at least a decade prior to the scheme’s inception. Additionally, three businesses with ties to Akshata Murty, the millionaire wife of Sunak, neglected to repay their Future Fund loans.

The Failure of the Future Fund Loan Programme

Pollen, a business that sells festival tickets and received a $5 million loan from the Future Fund, drew special attention. Despite receiving $150 million in a funding round, the company failed due to allegations that company directors had spent hundreds of thousands of pounds on drug-fueled parties. Prior to entering administration, Pollen was one of twelve companies to convert loans to shares. Callum Negus-Fancey, the proprietor of Streetteam Software, Pollen’s parent company, was a non-executive director of another recipient of the scheme that also failed.

The Future Fund was ostensibly intended for startups with rapid growth, but the evidence suggests that many recipients were neither fast-growing nor entrepreneurs. Numerous loans were granted to companies with affluent investors or ties to Sunak or the Conservative Party. The scheme proceeded despite initial concerns, resulting in the loss of millions of pounds worth of taxpayer funds on a variety of unsuccessful investments.

Image source: ©Kirsty Wigglesworth – WPA Pool/Getty Images

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