Rishi Sunak’s Future Fund, an initiative aimed at supporting startups during the pandemic, has sparked a wave of liquidations.
The fund, which provided essential loans during tough times, is now seeking to recover £5 million from companies that failed to repay.
Loans Turn into Burden
According to court records, the Future Fund has issued winding-up petitions to 32 businesses it supported during the pandemic. Resulting from these actions, many companies were ordered to cease trading without recouping the investments made. The fund, launched by Sunak in 2020 while he was Chancellor, aimed to bolster loss-making start-ups affected by the pandemic.
Aims and Reality
With the loans now reaching maturity, the fund has taken legal action to recover up to £5 million by pushing companies into compulsory liquidation. Since the end of 2022, 23 out of the 32 taxpayer-backed companies have been placed into administration or liquidation.
Notable Casualties
A spokesman for the British Business Bank, which operates the Future Fund, stated, “We have a duty to protect the interests of taxpayers. When companies reach the maturity date and their loans remain outstanding, we will take steps to recover funds, which may include seeking to wind up companies.”
Impact on Startups
As of the end of March, the Future Fund had converted 712 loans into equity stakes in companies, with 211 loans still outstanding.
Financial Outcomes
The Future Fund’s move to recover taxpayer money demonstrates the complexities and risks involved in supporting startups through loans.
Government Response
Going forward, similar schemes may face scrutiny as the outcomes of such support mechanisms are evaluated.
The Future Fund’s approach to recovering loans highlights the difficulties in backing startups during a crisis.
As many companies face liquidation, the balance between support and accountability is brought into sharp focus.