The British government holds shares in more than 150 startups

Spreading money to save businesses, the UK government holds shares in more than 150 startups

The UK government currently holds shares in 158 startups after a series of loans from tax revenues were converted into equity.

In theory, the loans converted into shares would allow the UK government to recoup the investment later. Photo: AFP

This information was announced by the state-owned British Business Bank (BBB) ​​on September 14.

Online ticketing app Dice FM, soft drink maker Gunna, and computer kit supplier Kano are three of the 158 startups in which the UK government has a stake. .

The Future Fund, a form of national investment fund, was announced by British Finance Minister Rishi Sunak in April 2020 as part of an effort to support British businesses “crippled” by the pandemic. Covid-19.

By June, the fund had been expanded to support British companies based abroad.

Startups have applied for loans from May 2020 to January 2021. The British Business Bank, which is assigned to manage the Futures Fund, said it had financed 1,190 companies in the form of £1.14 billion ($1.58 billion) convertible loans.

The loans are then convertible into shares in the startup’s next funding round. In theory, this would allow the UK government to recoup the investment later.

As of August 31, 158 loans have been converted into shares in startups. As many as 90/158 loans converted to equity were for London-based companies and only 4 companies in Wales have access to this loan.

Ken Cooper, Managing Director of Venture Capital Solutions at British Business Bank said: “Future Fund was created to inject capital into innovative companies during the height of the pandemic. while ensuring long-term value for UK taxpayers”.

“As a shareholder of many promising businesses, the Future Fund is well positioned to support and benefit from their continued growth,” said Mr. Cooper.

However, not everyone thinks that tax revenue should be used to support struggling startups. As Robin Klein, co-founder of LocalGlobe Venture Capital, warned, Future Funds “have the risk of diverting much-needed capital into the wrong place in the UK economy”.