--- title: The Future Fund needs a 2.0 | SFC Capital description: "Stephen Page, CEO of SFC, analyses why the scheme is insufficient for most \"true\" startups and why we need a Future Fund 2.0 that takes them into consideration." image: https://sfccapital.com/hubfs/Imported_Blog_Media/banner_1590515328.webp --- Disclaimer Please note, company introductions through SFC Capital Ltd ('SFC') are only suitable for ‘High Net Worth Individuals’, or ‘Sophisticated Investors’ as defined by the Financial Services & Markets Act 2000 (FSMA) who are familiar with and willing to accept the high risk associated with private investments. Any investor requesting to contact a company through SFC Capital does so at his/her own risk and is solely responsible for conducting any legal, accounting or due diligence review. There has been no investigation to the accuracy of any information or terms contained herein and we strongly suggest that you seek advice from a person authorised under the FSMA who specialises in advising on investments of this kind prior to commencement of any potential transaction. All content provided by SFC Capital is strictly for informational purpose only and does not constitute business, financial, investment, hedging, trading, legal, regulatory, tax or accounting advice or services. SFC Capital is an appointed representative of SFC Capital Partners Ltd which is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom (FRN 736284). This website is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. SFC Capital does not sell or offer to sell any securities and no information provided by SFC Capital is intended to constitute or to be interpreted as any such offer. SFC Capital simply provides an introductory service where potential partners of all sorts can meet. The SFC Angel Fund is managed by SFC Capital Partners Ltd (‘SFCCP’) which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, firm reference number 736284. Information on the Fund is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt. SFC Capital Partners Ltd (‘SFC’) is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom, firm reference number 736284. This document is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. The SFC Angel Fund is managed by SFC Capital Partners Ltd (‘SFCCP’) which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, firm reference number 736284. Information on the Fund is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt. The SFC Angel Fund is an SEIS/EIS fund which raises money for early-stage businesses by investing in SEIS and EIS eligible ventures with the aim of returning a profit for investors in the fund. Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS funds should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment product will be achieved or that the strategies and methods described herein will be successful. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. No warranties or representations of any kind are expressed or implied on this website. I Accept The Terms ## FCA Mandatory Risk Warning & Risk Summary > ## Risk Warning > > **Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong.** ## Risk Summary **Estimated reading time: 2 min** Due to the potential for losses, the Financial Conduct Authority (“FCA”) considers this investment to be high risk.   What are the key risks? 1\. You could lose all the money you invest. Investments made by the SFC Angel Fund SEIS (the “Fund”) will be in shares in early-stage businesses. Investors in these shares often lose 100% of the money they invested, as many early-stage businesses fail. 2\. You are unlikely to be protected if something goes wrong Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here: [https://www.fscs.org.uk/check/investment-protection-checker/](https://sfccapital.com/fca-mandatory-risk-warning-and-risk-summary/%20https://www.fscs.org.uk/check/investment-protection-checker/)    Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here: [https://www.financial-ombudsman.org.uk/consumers](https://www.financial-ombudsman.org.uk/consumers) 3\. You won’t get your money back quickly Even if the businesses the Fund invests your money in are successful, it may take several years to get your money back. The most likely way to get your money back is if the businesses invested in by the Fund are bought by another business or list their shares on an exchange such as the London Stock Exchange. These events are not common. 4\. Don’t put all your eggs in one basket Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.  A good rule of thumb is not to invest more than 10% of your money in high-risk investments.  [https://www.fca.org.uk/investsmart/5-questions-ask-you-invest](https://www.fca.org.uk/investsmart/5-questions-ask-you-invest) 5\. The value of your investment can be reduced The percentage of each investee company that the Fund owns will decrease if the business issues more shares. This could mean that the value of your investment in each investee company reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.  These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment. 6\. S/EIS tax reliefs are not guaranteed Whilst it is the Fund's intention to invest mostly in companies qualifying under SEIS legislation, SFC cannot guarantee that all investments will qualify for S/EIS relief (or IHT relief) or, indeed, if they do initially, that they will continue to do so throughout the life of the investment. The tax advantages of investing through the Fund are therefore not guaranteed.  If you are interested in learning more about how to protect yourself, visit the FCA’s website here: [https://www.fca.org.uk/investsmart](https://www.fca.org.uk/investsmart)  Close Don’t invest unless you’re prepared to lose all the money you invest. This is a high risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more. [![SFC Logo + Title x web](https://sfccapital.com/hs-fs/hubfs/SFC%20Logo%20+%20Title%20x%20web.png?width=2000&name=SFC%20Logo%20+%20Title%20x%20web.png)](https://sfccapital.com) - [Startups](https://sfccapital.com/raise) - Investors - [SEIS Fund](https://sfccapital.com/seis-funds) - [EIS Fund](https://sfccapital.com/eis-funds) - [SEIS Explained](https://sfccapital.com/seis-explained) - [EIS Explained](https://sfccapital.com/eis-explained) - [Angel House](https://sfccapital.com/angel-house) - [Advisors](https://sfccapital.com/advisors) - [Portfolio](https://portal.sfccapital.com/portfolio) - [About Us](https://sfccapital.com/about-us) - [Blog](https://sfccapital.com/blog) - [Login](https://portal.sfccapital.com/login) # The Future Fund needs a 2.0 [Stephen Page, Chief Executive Officer](https://sfccapital.com/blog/author/stephen-page-chief-executive-officer) Stephen, a former accountant turned entrepreneur, founded SFC Capital after running successful software companies for 30 years, now focusing on strategy and advising portfolio companies. - 20 May 2020 [News](https://sfccapital.com/blog/tag/news) ##### Share on - - - #### Stephen Page, CEO of SFC, analyses why the scheme is insufficient for most "true" startups and why we need a Future Fund 2.0 that takes them into consideration. *As published on* [*City AM*](https://www.cityam.com/coronavirus-the-future-fund-needs-a-2-0/) *on 20th May 2020.* The month between the announcement of the Future Fund – part of the government’s billion-pound package of financial support for innovative firms hit by the fallout of the coronavirus pandemic – and its opening for applications today has seen concerted lobbying from those concerned that it will fail to work as intended. I share those concerns. The Future Fund will only benefit companies that have already secured venture capital funding, excluding the 99 per cent of “true” startups that are still pre-VC. This is because while angel investors are *in theory* able to participate, the Future Fund’s Convertible Loan Notes (CLNs) are not compatible with the SEIS and EIS vehicles through which the vast majority of them invest. In reality, very few will take the plunge. With more than half of all funding for UK startups coming from individual investors – venture capital contributes less than 20 per cent – this is a big problem. Venture-backed companies should have a longer financial runway than their more vulnerable early-stage counterparts. But I anticipate the Future Fund will be exhausted within a week as – in the absence of angel investors – VC firms hoover up the money to protect their existing portfolio companies. With VCs holding off on new deals for the time being, very little – possibly none – of the Future Fund will go to first-time recipients of VC backing. The most vulnerable companies will miss out and many will fail as a result, their innovation and job creation potential lost from the economy. I would suggest the government did not consult widely enough in developing the Future Fund – or at least did not give due weight to the concerns of those of us at the early-stage coalface, not just the VC community. How could it resolve the issue? One suggestion – that the income tax relief on investments made through EIS could be dramatically increased to boost angels’ confidence and keep the investment pipeline flowing regardless of compatibility with the Future Fund – risks blurring boundaries between EIS and SEIS, potentially harming the latter in the long-term. Another proposed solution – making EIS compatible with CLNs – is impractical, requiring legal changes with wider-reaching ramifications. A better solution would be to roll out a “Future Fund 2.0” that doesn’t rely on CLNs – or even a different fund explicitly targeted at pre-VC startups – to enable investments made by angels through EIS to be eligible for government matching. It had been hoped that change could be achieved in time for the opening of applications this week, but it has apparently fallen foul of EU State Aid legislation and it seems we might have to wait until September at the earliest for a solution. A wide range of UK startup success stories, from meal kit retailer Gousto – often namechecked by Chancellor Rishi Sunak – to biometrics and digital ID company [Onfido](https://onfido.com/), touted as a potential provider of “immunity passports”, benefited early on from SEIS/EIS funding. Likewise many of the R&D-derived, IP-rich companies spun out of universities that the government has pledged to put at the heart of the UK’s industrial strategy. There are a lot of excellent entrepreneurs building all manner of innovative early-stage businesses, for whom the current crisis represents an existential threat. It has been suggested that Innovate UK grants and the recently-announced Bounce Back Loan Scheme could plug the funding gap. But while any eligible company should take the BBLS money, pre-revenue startups can claim nothing – and the grants are only available to highly innovative companies for specific projects. If we are to protect these businesses and safeguard the future of UK innovation, grants and loans will only go so far. We urgently need an equity funding scheme for early-stage companies. We need a Future Fund 2.0. ## Related Articles 19 Apr 2017 [Events](https://sfccapital.com/blog/tag/events) ##### [Startup Funding Club holds its first Investor Event after the first close of the 2017 SFC Funds at The Ivy](https://sfccapital.com/blog/startup-funding-club-holds-investor-event-after-first-close-of-2017-sfc-funds-at-the-ivy) Startup Funding Club announces the close of the first tranche of the 2017 SFC SEIS/EIS Funds at its ... [Read More](https://sfccapital.com/blog/startup-funding-club-holds-investor-event-after-first-close-of-2017-sfc-funds-at-the-ivy) 28 Mar 2017 [Events](https://sfccapital.com/blog/tag/events) ##### [Startup Funding Club holds its last Investor Event before closing this year’s SEIS/EIS Fund](https://sfccapital.com/blog/startup-funding-club-holds-its-last-investor-event-before-closing-this-years-seis-eis-fund) Startup Funding Club showcased five promising startups in its last Investor Event before closing thi... [Read More](https://sfccapital.com/blog/startup-funding-club-holds-its-last-investor-event-before-closing-this-years-seis-eis-fund) 22 Apr 2017 [News](https://sfccapital.com/blog/tag/news) ##### [Startup Funding Club takes part in the Asian Productivity Organisation’s Study Mission](https://sfccapital.com/blog/startup-funding-club-asian-productivity-organisation-study-mission) Startup Funding Club was invited to present its company and four of its funded Internet-of-Things st... 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This website is intended for  professional investors, high net worth investor or certified sophisticated investors only for the purposes of the FCA's Conduct of Business Sourcebook.; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell any securities. Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS eligible companies should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment opportunity will be achieved or that the strategies and methods described herein will be successful. The investment products cited herein may place capital at risk and therefore investors may not get back the full amount invested. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. Companies’ pitches for investment are not offers to the public and investments can only be made by members of SFC Capital. SFC Capital takes no responsibility for this information or for any recommendations or opinions made by the companies. Neither SFC Capital nor any of its employees provide any financial or tax advice in relation to the investments and investors are recommended to seek independent financial and tax advice before committing. 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This material is confidential and is the property of SFC Capital. © SFC Capital - 2026 ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Stephen Page, Chief Executive Officer", "url" : "https://sfccapital.com/blog/author/stephen-page-chief-executive-officer" }, "dateModified" : "2024-03-20T10:43:36.160Z", "datePublished" : "2020-05-20T05:38:00.000Z", "headline" : "The Future Fund needs a 2.0 | SFC Capital", "image" : [ "https://sfccapital.com/hubfs/Imported_Blog_Media/banner_1590515328.webp" ], "mainEntityOfPage" : { "@id" : "https://sfccapital.com/blog/future-fund-needs-a-2-0", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject" }, "name" : "SFC Capital" } } ```