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The financial squeeze facing some of Britain's fastest-growing start-ups was illustrated on Wednesday as the Treasury saw an instant deluge of demand for new money from the government's latest coronavirus bailout vehicle.
Sky News has learnt that the Future Fund - to which the chancellor, Rishi Sunak, had committed an initial £250m of taxpayers' money - received applications for more than £450m on its first day of operation.
One Whitehall official said that at the close of business on Wednesday, the figure had reached £453m - meaning a total of at least £906m was being pledged in less than 24 hours to innovative British businesses.
The extraordinary level of demand from growth companies in technology and life sciences suggests that the Future Fund will ultimately dwarf original expectations.
Mr Sunak said this week that the original figure of £250m, which has been provided to match funding provided by private investors, would be expanded if necessary.
The 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 Treasury's investment in each company is being structured as a convertible loan, which will be converted into equity if the loan is not repaid.
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Mr Sunak has said the Future Fund will be open until September, suggesting that if applications continue at a robust pace, it could ultimately provide several billion pounds to fast-growing companies.
"Our start-ups and innovative firms are one of our great economic strengths, and they will help spur our recovery from the
pandemic
," the chancellor said as he launched the new fund on Wednesday morning.
"The Future Fund will support firms across the UK to get through the pandemic by stimulating investment, so that they can continue to break new ground in technology and innovation."
The Treasury said that investors who were providing the private sector match-funding would be encouraged to sign its Investing in Women Code, which commits signatories to improving female entrepreneurs' access to funding.
It added that the ministers would amend the rules of the Enterprise Investment Scheme (EIS), which provides tax relief to investors in high growth firms, "to protect Future Fund investors from losing relief on their previous investments made prior to any investment through the Future Fund".
The EIS issue had been cited as a major obstacle by prominent tech investors.
It was unclear whether officials were continuing to explore amending the Future Fund's terms, which state that a successful applicant must have a UK-based parent company.
That rule has sparked complaints from dozens of start-ups which are backed by US-based 'accelerator' programmes and which would, without changes, be deemed ineligible.
The Treasury declined to comment on Wednesday evening.
