The British Business Bank’s Future Fund, created to support innovative UK companies during the Covid-19 crisis, has played a vital role in helping many of them survive, according to an independent evaluation.

In its evaluation of the programme, RSM UK Consulting LLP found that the Future Fund played a stabilising role in mobilising private capital and maintaining investor confidence during the pandemic, particularly within high-growth sectors such as AI, biotech and renewables.

Among those firms that received support, 70% said they were in danger of closing within 12–36 months without the Fund.

The analysis also claims that the Future Fund has since helped businesses build credibility and unlock follow-on investment, with nearly half of recipients securing additional private capital and a small group of top-performing businesses, concentrated in IT and Software, growing exceptionally fast, achieving growth rates eight times higher than the average.

Data up to March 2024 found that portfolio firms experienced median turnover growth of 22.5% in 2023 and 21.5% in 2024, and Future Fund recipients also achieved higher growth in fundraising than smaller businesses across the wider equity market between 2021-2023.

“The Future Fund was established at pace to ensure a rapid flow of capital at the height of the pandemic, bridging the funding gap for early-stage equity-backed businesses,” said Marilena Ioannidou, senior director of the Future Fund at the British Business Bank.

“It is encouraging to see that the Future Fund delivered on its objectives, providing a vital lifeline for innovative smaller businesses so they could continue to operate and grow, playing a key role in preserving the UK’s innovation pipeline.”

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However, despite the positive findings, the Fund has been dogged by claims that funding was handed out to ‘lame duck’ businesses that quickly went bust.

According to reports from the Guardian in 2023, millions in taxpayer cash had been lost to firms that were neither fast-growing scaleups or promising startups, with the Bank’s chief executive reportedly warning at the Fund’s outset it would only attract ‘second-tier’ firms that could not find investment anywhere else.

Adding to the concerns, last year, new reports surfaced that businesses that had taken loans were struggling to repay them. Overall, £282 million was provided to 340 companies that eventually folded, according to reports from the Times in February, with the investment scheme found to have recouped just £75 million over the five years it has been active, losing £250 million in taxpayer money.