Thread by @fdestin

1/ UK Gov announced £250M #FutureFund to support startups with matched funding.

Key terms as published are as follows:

2/ Unsecured convertible bridge loan alongside matched investors -- up to 50% of the bridge amount.

Min £125,000 – Max £5,000,000.

Note there is NO CAP on bridge size or on valuations so this is designed to serve startups and scaleups.

3/ Conversion into Equity at Discount Rate agreed with a minimum of 20%.

Conversion automatic if Next Round Amount > Bridge Amount (“qualifying round”)

4/ Interest rate min 8% p.a. non-compounding paid on maturity.

Maturity = 36 months.

The interest converts at the full price of the next round on a conversion event (i.e. no discount applied to interest).

5/ On maturity, the loan is either

(a) repaid with a redemption premium of 100% or
(b) converted into equity at the Discount Rate set by the most recent funding round … subject to Government consent.

6/ On a sale or IPO
(a)Conversion at the Discount Rate to the price set by the most recent non-qualifying funding round OR
(b)repaid with a redemption premium equal to 100% of the principal of the bridge funding
… whichever will provide the higher amount for the lenders.

7/ Eligibility: unlisted UK registered company that has raised at least £250,000 in aggregate from private third party investors in previous funding rounds in the last five years and have a substantive economic presence in the UK

8/ Use of funds: solely working capital purposes

...and not borrowings, dividends or bonus payments to team, shareholders or consultants

... or any advisory or placement fees or bonuses to external advisers as it related to the Government loan

9/ There's a few open questions but it's soundly designed and simple to understand.

The delivery side is still being worked on so you can't apply just yet. Details will be forthcoming shortly.

Source doc link via @Kieranleehill
assets.publishing.service.gov.uk/government/upl…