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UK Treasury takes stake in hipster record label

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The Treasury has become a shareholder in a hipster vinyl-led record label under a coronavirus support scheme for innovative, fast-growing companies.

London-based Gearbox Records, which specialises in unreleased jazz, folk and electronic music, is the latest business that has the UK taxpayer as one of its investors after taking convertible loans from the Future Fund.

The unusual venture capital-style structure of the support scheme is expected to leave the British state with hundreds of stakes in a wide variety of businesses. 

More than 1,100 companies have received £1.1bn in loans that could convert to equity from the Future Fund, which was launched in May last year to support “innovative” but lossmaking companies unable to secure funds elsewhere owing to the pandemic.


The Treasury has also taken a stake in Vaccitech, one of the UK’s most highly rated pharmaceutical start-ups, according to people close to the situation.

The Oxford start-up owns the biotech platform used for the AstraZeneca Covid-19 vaccine and is considering a stock market listing in coming months.

Vaccitech, one of whose co-founders led the development of the Oxford/AstraZeneca vaccine, raised $168m earlier this month, valuing the start-up at about $425m. Vaccitech declined to comment.

More than fifty companies have had their loans now converted into equity, according to people familiar with the situation, ranging from a Cornish broadband provider to a maker of low-flush toilets based in Essex.

Darrel Sheinman says Gearbox Records met the Future Fund requirements as a fast-growing start-up that had raised equity from investors to finance its expansion © Gabriel Bertogg

The identities of the companies are not disclosed by the British Business Bank, which administers the scheme. It has faced repeated calls for more transparency over which groups have received government-backed emergency coronavirus loans.

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Gearbox Records, the King’s Cross-based record label and studio, raised £500,000 in December, with half coming from the conversion of its Future Fund loan. The government owns about 4 per cent of the business.

Gearbox Records founder Darrel Sheinman said that he applied to the Future Fund as a “long shot” when the pandemic hit in case he needed extra money after record shops were forced to shut. 

He said the company met the requirements as a fast-growing start-up that had raised equity from investors to finance its expansion. He added that technology played a big part in the business given digital sales of its catalogue, and the invention of a record player with bluetooth and Wi-Fi connectivity. It also runs a studio, where artists from the Prodigy to Moses Boyd have recorded and mastered records.

Sheinman said the experience of working with the Future Fund had initially seemed bureaucratic, adding: “Now they are a shareholder, we received a note explaining they were excited to be so, and gave me further instructions as to how to keep them updated with news via their portal. As a record label, the sort of news we send does not necessarily fit the portal.”

The British Business Bank said the Future Fund had a team of senior investment professionals but that it was recruiting to increase capacity as needed. “While the portfolio is large by number of companies, Future Fund’s shareholding in each of the companies that have converted to equity is relatively small.”

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The Future Fund, which has made loans ranging from £125,000 to £5m subject to at least equal funding from private investors, closed for new applications in January.

Seven companies backed by the scheme, which have also secured money through crowdfunding schemes, have had loans converted into equity so far, according to data provider Equity Crowd Expert. These include Gearbox Records, electric charging group Aeristech, broadband provider Wildanet and low-flush toilet maker Propelair.

Tech executives have questioned why the Future Fund was necessary given the vast amounts of money already available from venture capital funds searching for fast-growing businesses to back. 

But since closing the Future Fund, the government has launched a second-stage £375m Future Fund Breakthrough scheme that will take further stakes in promising tech and life sciences companies.

“The Future Fund supports high-growth British businesses to stimulate private investment and support jobs and growth,” the government said in a statement.

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