Sunak’s Future Fund start-up failure to cost taxpayer £5m

TAXPAYERS face losing £5m on a failed bet on a British rival to Zoom as another investment from the Government’s Future Fund unravels.

Starleaf, a video conferencing app company based in Cambridge, raised millions from the £1bn Future Fund, a start-up bailout fund launched by Rishi Sunak, the former chancellor, at the height of the pandemic in 2020.

The start-up, which targeted business clients, fell into administration in June after the collapse of the working from home boom and competition from tech giants such as Microsoft’s Teams software and Zoom.

Administration filings from advisers Kroll show the Government’s Future Fund is owed £10m. Its investments were backed by 50pc taxpayer cash, suggesting a £5m loss for the state. Other major creditors include venture fund Highland Europe and private equity firm Grafton Capital.

The company’s 60 staff are owed £270,000, the documents show, while HMRC is owed £200,000. Creditors are owed £38m by the failed start-up.

It adds to a growing list of Future Fund companies to go to the wall. At least 30 businesses the fund invested in have collapsed. Roli, a start-up making futuristic musical instruments, collapsed after burning through $75m (£62m) in investor cash, including taxpayer funds. Tech Will Save Us, which made educational kits for children to learn about technology, went bust last year despite a £700,000 taxpayer loan.

The Future Fund saw the Government offer loan notes to start-ups of up to £5m, which would convert to equity if they raised more cash.

The British Business Bank, which manages the Future Fund, said it did not comment on individual companies.

It added: “Investments made by the Future Fund were based on a set of standard terms with published eligibility criteria. The process provided a clear, efficient way to make funding available as widely and as swiftly as possible without the need for lengthy negotiations. Applications that met the eligibility criteria received investment.”