How taxpayer cash is being used to prop up failing ‘Zombie’ companies in the Future Fund – Telegraph.co.uk

The Government says that 60pc of applicants for Future Fund money have been successful.

SeedLegals, which built its own tool for start-ups to apply for the money, says that every single business which applied through its site and received a response went on to securefunds. The average amount was608,000, it found.

Investors claim that restrictions on co-investment alongside the Future Funds convertible notes has blocked a largenumber of businesses from applying for money.

Any investor which backs start-ups using the Government-backed Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Schemes is unable to have funding matched by the Future Fund. This has led to a cut in the pool of potential recipientsas many start-ups choseto stick with EIS backers.

If it's a toss-up between taking a bit less money and taking the Future Fund, all my founders have said 'Actually we'd rather just take a bit less money, says Reece Chowdhry, the head ofRLC Ventures.

Because they narrowed the pool of investors that they can co-invest alongside, they're left with a very small group of the market, he adds.

Anthony Rose, the chief executive of SeedLegals, says the Future Fund was not the saviour of start-ups that many had hoped for or were able to take advantage ofand it did not come without some significant issues.

The Future Fund is not the first time that Government backing of technology start-ups has provoked criticism. The Register reported in 2014 that former model Lily Coles gift economy business Impossible was given 200,000 in grants before it began selling items such as 2,200 stools made of bread.

Start-ups which did apply for Future Fund money includeLintel, a financial technology company.

The start-up received an unknown amount of Future Fund backing for its banking service which hasnt launched or been given regulatory approval. In 2018, Lintel was a dormant business with just 960 in assets. Its latest accounts show 197,000 in assets this year but just one employee.

Other businesses make money in a way that would make manymore conservative MPs blush.

One recipient is Killing Kittens, a company notorious for its sex parties. Its founder, Emma Sayle, is a former school friend of the Duchess of Cambridge, Kate Middleton. Sayle says her business, which faced a funding hole due to social distancing, deserved support like any other.

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How taxpayer cash is being used to prop up failing 'Zombie' companies in the Future Fund - Telegraph.co.uk

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