UK start-up pays taxpayers money to one of its shareholders

A British payment company currently facing bankruptcy has taken taxpayer money from Rishi Sunak’s “Future Fund” and used it to buy technology from an investor who helped him in a fundraising operation.
GoodBox took out £ 9m in a convertible loan deal in January 2021 from a fund of the future scheme, which ran into the first year of the pandemic, according to people familiar with the matter and shareholder communication seen by the FT .
Half of the money came from a company called QInvest Limited, which is run by British payment entrepreneur Miles Carroll. The rest, £ 4.5 million, came from taxpayers.
A portion of the funds is earmarked for the purchase of a payment processing technology called a payment gateway. Three days before the signing of the Future Fund deal, GoodBox agreed to license this technology from QInvest at a cost of EGP 5.2 million, which means that QInvest will actually recover its money, in addition to EGP 700,000 in taxpayers’ money.
Since then, GoodBox, which sells payment devices for charitable donations, has been looking to be brought under judicial administration, according to shareholder communications. A creditor of the company seeks to appoint judicial directors, while “Good Box” has appointed advisers to follow up a predetermined sale process, before placing it under judicial administration.
The news is a blow to the UK Government’s venture capital fund, a program that has led to taxpayers owning interests in a wide range of UK start-ups, but has been hit by low levels of fraud.
GoodBox CEO David White did not respond to requests for comment, while Carroll, also a shareholder in GoodBox, said in a brief phone call: “I will not comment.” He did not comment in detail when the Financial Times later contacted him by email. But he said there were errors in the details provided to him by the Financial Times, which he could not identify due to confidentiality clauses.
The Future Fund, which has entered into £ 1.1 billion deals with more than 1,000 new businesses, has demanded that the companies find a third party to apply on their behalf, offering up to £ 5 million in funding that the main investor would at least fit. . The loans have a term of 36 months.
The provisions of the Future Fund do not seem to prevent companies from buying services from the main investor.
Founded in 2016, GoodBox has among its clients the Church of England, the Museum of Natural History and the British Red Cross, according to its website. The company raised funds in 2019 with a pre-valuation of £ 19 million, on the crowdfunding website Cedars. But the company was hit hard by the pandemic, which forced it to take an emergency financing round in early 2020 at just 12.5 percent of the share price it had levied the year before. Then I got support from the Future Fund, which offered transferable loans to any company that met its criteria.
In a January 2021 letter to shareholders, GoodBox described the fund’s £ 9 million financing of the future as “conditional” on the company doing its best to buy a payment gateway. She said the “last requirement” to complete the Future Fund transaction was to obtain shareholders’ approval to spend up to £ 5.2 million for the purchase. She said this amount is “the price set for one special interest rate gate,” which she did not specify.
In April, GoodBox told shareholders that the future fund deal had given the company enough money to “stay profitable” and allowed it to have a £ 5.2m “prime payment program”.
But it said revenue had not recovered as quickly as expected, saying the payroll program was still “subject to strictly necessary oversight and would only be accepted after it had been fully reviewed and verified”.
Future fund loans are generally converted to equity at a discount of 20 percent of the rate applicable in the financing round. Loan bondholders have the option to convert if the financing round is less than the loan size. The conversion is done automatically for rounds of equal or larger size.
Last week, one of GoodBox’s IT providers, NGI Systems, submitted a request to appoint managers. Good Books told investors last week, in documents seen by the Financial Times, that NGI “is asking for large amounts of commitment, on which we do not agree”.
“We promise that it is in GoodBox’s interest for directors to be appointed by the court to investigate some dubious board transactions,” Yuan Polyancic, NGI’s secretary, said in an email. “The excellent example is a £ 5.2 million deal. UK taxpayer financing.

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