The chancellor is expanding the £500 million Future Fund for UK startups hit by the Coronavirus to ensure firms which shifted their headquarters abroad can still access the scheme.

It will now benefit companies that are seen as British in all but name, having moved their parent company to seek investment in the US or take advantage of accelerator programmes like Y Combinator.

Future Fund applicants will still have to prove that at least half of their staff are based in the UK and that they make at least half of their revenues from UK sales, the Treasury noted.

“This change means that those startups who have strived to be the very best, and taken opportunities to grow their business, will be able to benefit from our world-leading Future Fund,” stated Rishi Sunak.

Launched on 20 May, the Future Fund consists of convertible government loans worth between £125,000 and £5 million, given to companies that have previously raised at least £250,000 of equity investments. Those loans are matched by private investors, but the government debt will convert to equity if the loans are not repaid.

The government initially committed £250 million in loans as part of a £500 million fund matched by private investors. However, the government has now approved £320 million worth of loans to more than 320 early-stage firms.

The Treasury has not confirmed whether there is a cap for the expanded fund.

Business secretary Alok Sharma said: “As we restart our economy, it is crucial that our innovators and risk-takers get all the support they need to flourish – our decision to relax this rule recognises the importance of many of the UK’s most cutting-edge startups as we bounce back from Coronavirus.”

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