Expert’s view

The Future Fund: what the experts think

Back to the future, eclectica and an awkward case study

Back to the future 

The idea of government trying to “back winners” fell out of favour in the Thatcher era, said John Harrington on ProactiveInvestors.co.uk. But, along with Keynesian economics, it’s back with a vengeance. This week, the Treasury revealed some of the fruits of the Future Fund scheme – which provided £1.1bn of convertible loans to 1,190 start-ups to help them through the pandemic – listing 158 companies “that have had their loans converted into equity stakes”.

The hope is that these fledgling companies will grow into sound investments, enabling the taxpayer to make a return “later down the line”. If nothing else, it makes a change from the “usual” practice of “bailing out systemically important loss-making companies that have spectacularly failed”. 

Eclectica 

The list is certainly eclectic, said Kalyeena Makortoff in The Guardian: ranging from Vaccitech, a co-inventor of the AstraZeneca Covid vaccine, to the windfarm company Ripple Energy, to an array of soft drink brands (including the kombucha-maker Better Tasting Drinks). There is also “a bespoke shipbuilder”, a “knitting and crochet supplier”, a ski-wear maker and several events-related businesses, including Secret Cinema and the gig ticketing app Dice FM. Critics may wonder, however, whether all these companies meet Chancellor Rishi Sunak’s stated mission to “transform UK industry, develop new medicines and strengthen our position as a science superpower”. 

Awkward case study 

Some venture capitalists have complained that the Future Fund scheme “risks misdirecting much-needed capital to the wrong part of the economy”, said CNBC. Others note that what is effectively “one of Europe’s largest venture capital funds” is largely opaque, said James Hurley in The Times. Although the Government has now published the names of the 158 companies it has formally backed, the taxpayer is none the wiser about many of the details. Sunak has acknowledged the potential for embarrassment, and there’s already at least one “awkward case study”. The education start-up Mrs Wordsmith failed less than six months after receiving £650,000 of state cash. One of Mrs Wordsmith’s minor shareholders was Catamaran Ventures UK, “the investment company controlled by Sunak’s wife, Akshata Murthy”.

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