Companies backed by Sunak's Future Fund more likely to have failed, report finds

"Companies that received government support through Rishi Sunak's pandemic-era Future Fund were more likely to collapse than peers who did not take state money, according to a new audit that raises fresh questions about the scheme's value. A review by RSM UK Consulting found that Future Fund-backed firms were more likely to have gone into liquidation, suffered sharper falls in employment, and showed no outperformance on key financial measures such as turnover or valuation compared with non-funded peers."

"The findings will intensify scrutiny of the £1.14 billion scheme, set up in May 2020 to provide lifelines to loss-making, technology-focused start-ups that could not access other Covid finance programmes. Under the initiative, 1,193 companies received state-backed loans, which had to be matched by private investors. The loans were later converted into equity stakes, leaving the government with one of Europe's largest and most eclectic venture portfolios."

"The RSM report said "slightly more" of the comparable businesses outside the fund remained active, "suggesting marginally stronger resilience outside the fund". While liquidation rates were higher among portfolio companies, RSM noted that exits - such as sales to other firms - were also more common among Future Fund-backed companies, and a handful of "outlier" firms are growing at exceptional speed, offering some hope of long-term taxpayer returns."

Companies that received support from the Future Fund were more likely to enter liquidation and show weaker employment outcomes than similar non-funded peers. RSM UK Consulting found no outperformance by funded firms on turnover or valuation. The £1.14 billion scheme provided state-backed loans to 1,193 loss-making, technology-focused start-ups from May 2020, later converting loans into equity and creating a large government venture portfolio. By June, 340 portfolio companies had failed. While exits and a few high-growth outliers exist, overall portfolio resilience and employment retention lagged behind comparable businesses. The scheme targeted firms unable to access other Covid finance programmes and required private investor matching.

Read at Business Matters