Future Fund: Breakthrough

July 26, 2021

The British Business Bank (“BBB”) has launched a new fund, whereby the BBB (which is backed by the UK government), will co-invest with certain investors in high-growth, innovative firms. It is called Future Fund: Breakthrough (“FFB”), and due to its structure, it will be of particular relevance to investors in the life sciences and technology sectors.

The FFB will provide up to £375 million of funding to high-growth and innovative firms operating in breakthrough technology sectors such as quantum computing, cleantech and life sciences. In deploying its capital, the BBB will co-invest with certain investors (described more fully below) in research and development (“R&D”) intensive companies, through British Patient Capital (“BPC”), the BBB’s commercial subsidiary.

Applications for FFB funding must be made to the BPC by a lead investor, who will be expected to make a significant investment alongside BPC. The FFB will make direct equity co-investments in the investee companies alongside private investors. It is an entirely different fund to the “Future Fund,” which offered convertible loans to earlier-stage companies, and which is now closed.

In this OnPoint, we outline the FFB’s key eligibility requirements for investors and companies, and we describe the investment process of a successful application.

Lead Investor ("LI") Criteria

A company seeking funding (the “Company”) may not apply for FFB funding directly, but must do so through a qualifying LI. In order to apply to the FFB, eligible LIs can be one of the following:

  • a fund that is managed or advised by an FCA (or equivalent) authorised firm with private sector investments making up greater than 50% of its total fund size and managing an active fund greater than £100 million. The fund must have raised capital from at least three independent limited partners (or equivalent) and the fund must have a written investment strategy aligning with FFB’s investment strategy; or
  • any fund or investment vehicle with an “appropriate” (to be determined by BPC) strategy, managed or advised by a fund manager that has previously applied to and obtained an investment from a member of the BBB group; or
  • other equivalent investment vehicles i.e. those with a minimum of £100 million investment capital, a broad range of independent investors (at least three) and an appropriate investment strategy, approved by FFB.

Following the initial application to FFB by the LI, the LI will be expected to share an investment paper with BPC setting out the investment thesis for the investment, including valuation, business plan and follow-on funding expectations. The LI is subject to reputation and customer due diligence, and it will be expected to share any legal and financial due diligence in relation to the Company with BPC. Tax-advantaged investors such as Enterprise Investment Scheme investors or venture capital trusts will be able to invest as part of a syndicate, but cannot be an LI for FFB’s purposes.

There is no barrier to an overseas investor becoming an LI.

Investors such as sovereign wealth funds, family offices and investment trusts that do not meet the criteria for an LI can participate in the round alongside a qualified LI, even if they do not meet the criteria for being an LI themselves.

Company Criteria

As mentioned above, the FFB is targeted at UK companies in breakthrough sectors carrying our R&D activity in the UK. The specific criteria an FFB-eligible R&D-intensive Company must meet are:

  • it must be UK-based with at least half of its overall employment base and research employees in the UK;
  • it must be carrying out meaningful R&D activity in the UK, meeting all three of the following criteria:
    • spending (defined by FRS 102 as “original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding”) will have been at least 10% of the Company’s total operational cost base (including both fixed and variable operational costs) on average over the last three years, or at least 15% in one of the past three years;
    • the Company must be developing defensible intellectual property (“IP”) (i.e., the Company is the proprietor of or the applicant for a patent or other IP right) in the UK, which it expects will be the Company’s main source of revenue; and
    • the Company intends that 20% or more of its employees will be carrying out research for at least three years from the date of investment (in roles requiring a master’s degree or higher).
  • it must also have raised at least £5 million in previous funding rounds and any FFB investment in the Company should not result in the UK government owning more than 49% of the same (including when combining shareholdings from other investment programmes).


The minimum total investment round in which the FFB will participate, including FFB capital, is £30 million and the maximum FFB share of an investment round is limited to 30%.

This means that the minimum amount of private investment required for FFB eligibility is £21 million.

Upon receipt of an initial application from the LI, the BPC will assess the suitability of the LI to act as a lead investor, which entails checking that the LI satisfies the criteria described above. If successful, the LI is then expected to set up an introduction between BPC and the Company, so that BPC can assess the Company and the transaction’s eligibility. The BPC can then carry out its due diligence and come to a final decision on whether to move forward through a decision of the BPC’s investment committee.

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