Venture capitalists have exhausted the initial £250m capacity of the government’s Future Fund within just one day of opening.

The £250m Future Fund received over £400m worth of applications from start-ups on its first day yesterday, May 20, implying £906m of capital has been pledged in less than 24 hours to innovative British businesses, according to Sky News.

Any start-up applying for a Future Fund loan must have matching funding from a venture capitalist.

>See also: Future Fund – government tech start-up bailout scheme how it works

Michael Buckworth, managing director at specialist start-up solicitors Buckworths, said that excluding Enterprise Investment Scheme relief for Future Fund investors providing matching funding significantly weakened demand, and that angel investors would not likely invest.

Clearly, this has not been the case.

However, according to the Telegraph, lawyers working on the scheme were unable to include tax breaks because of state-aid restrictions in Europe, despite pushing from officials.

One Whitehall official told Sky News that at the close of business on Wednesday, the figure had reached £453m, suggesting that the Future Fund will almost immediately have to double capacity to £500m, as chancellor Rishi Sunak had promised.

AdvertisemeThe terms of the scheme, which allows UK-based companies to seek convertible loans of between £125,000 and £5m, mean the government is likely to end up with equity stakes in scores of start-ups.

The scheme, which is available for UK incorporated businesses which have half or more employees and sales in the country, is open for applications until the end of September 2020.

The Treasury’s investment is a convertible loan, which transfers to equity if it is not repaid, meaning that the government may become a stakeholder in numerous British startups.

Brent Hoberman, the tech entrepreneur and mentor, told the FT that the Future Fund should give venture capital-backed companies “longer runways to get through the crisis”.

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