Rishi Sunak's Future Fund Faces £250m Loss
Taxpayer-backed Future Fund, launched during the pandemic to support struggling startups, faces a loss of over £250 million as hundreds of participating companies have gone bust.
The Department for Business and Trade (DBT) accounts reveal the fund's value has dropped to £799 million from the initial £1.1 billion invested in 2020-2021.
Five years since its inception, only £75 million has been recovered through repayments or sales, resulting in a £263 million loss.
The fund, designed to aid loss-making startups excluded from other pandemic support schemes, provided loans of up to £5m each to 1,192 companies, convertible into equity upon subsequent fundraising.
However, numerous borrowers have collapsed, citing the strict loan terms of the Future Fund as a contributing factor.
As of April 2024, 202 companies had become insolvent, resulting in a £42 million decline in the value of the government's holdings. The British Business Bank indicates further bankruptcies, suggesting the losses could exceed the reported figures.
The government has received cash returns from 86 companies and holds stakes in 680, while 117 have received loan extensions. The DBT expresses doubt in recouping its investment from extended loan recipients, valuing the remaining loans at £16 million.
A spokesperson for the British Business Bank states that the government did not select the investments, which were based on loans made by private investors. The fund's performance is expected to align with market trends, but it is too early to determine the overall outcome.