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Most public startup money cannot be applied for directly: how co-investment works

Editorial

By TrustList Editorial

Of 67 public startup programmes we list, 32 invest through or alongside private investors and 20 cannot be applied to directly. How the British Business Bank, EIC, SBIC, SSBCI, Israel and SVC match private money.

About Most public startup money cannot be applied for directly: how co-investment works

Most public startup money cannot be applied for directly: how co-investment works

We hold 71 live listings for startup funding programmes on TrustList, from the British Business Bank's regional funds to India's Fund of Funds for Startups and Saudi Arabia's SVC. Sorting them by how the money actually reaches a company gives a result that surprises most founders who write to us asking where to apply.

Four of the 71 are private platforms or trade bodies. Of the 67 public programmes, 32 put public money into companies through private investors or alongside them, and 20 of those can only be reached through a fund manager, an angel syndicate, a lender or a state programme: a founder cannot apply to them at all. Only 20 pay grants, loans or awards straight to the company. The remaining 15 are incubators and accelerators (11) or tax reliefs (4, three for investors and one for companies).

Put plainly, the largest public pools of startup money are designed so that the state never picks the company. A private investor does, and the public money follows. This guide explains how that works, scheme by scheme, and what it means for where a founder should spend time.

How we counted. We read the 71 startup funding programme listings live on TrustList on 14 October 2026 and classed each by its route to the company: through intermediaries only; co-investment that needs a private investor to commit first; a mix of investing in funds and directly; direct grants, loans or awards; incubators and accelerators; tax reliefs; or private platforms and associations. One listing, ELEVATE Karnataka, is archived and not counted. The figures below for each scheme come from the scheme's own pages, read on 14 October 2026.

Why governments invest this way

The argument for co-investment is that public money should add to private money, not replace it. The British Business Bank says its Enterprise Capital Funds programme exists to encourage "an increased flow of private capital into the equity gap", and that the public share in each fund is set by competitive bidding "to ensure the minimum necessary amount of public support in each case". Its Regional Angels Programme aims "to attract further third-party capital alongside business angels while generating a market rate of return."

The European Investment Fund is blunter about its own limits. "The EIF does not provide financing directly to these beneficiaries," its InvestEU page says, relying instead on "our strong network of intermediaries across Europe". Its equity investments are made "to develop the market and to attract private investment".

Three ideas run through all of these schemes:

  • Additionality. Public money should make a deal happen that would not have happened, or make it bigger, rather than fund what the market would fund anyway.
  • Private selection. A fund manager or angel with their own money at risk chooses the company, which keeps civil servants out of picking winners.
  • Leverage. Each public pound or dollar should bring in several private ones, and many schemes state the ratio they aim for.

The cost of this design falls on the founder: the public programme is invisible until a private investor is already interested.

The UK: a bank that never meets the company

The British Business Bank is the clearest example. Almost all of its equity programmes reach companies through someone else.

Angel CoFund invests 100,000 to 1 million pounds alongside "strong syndicates of business angels", capped at 49 per cent of a round and 30 per cent of a company's equity. Its page is explicit: "you can't approach this fund directly". A founder first has to win over an angel syndicate, which then brings in the CoFund. The bank's own guide to angel investment notes that angels typically invest between 5,000 and 500,000 pounds for a stake of 10 to 25 per cent, so the CoFund lets a syndicate write a bigger cheque than it could alone.

Regional Angels Programme commits money to angel groups outside London, who invest it with their own. The bank reports 34 commitments to 23 delivery partners and total programme capital of 285 million pounds after a further 150 million pounds announced at the 2021 Spending Review. Founders reach it through those partners; the programme's calls for proposals are for angel groups, not companies.

Enterprise Capital Funds works one level higher still. The bank commits "up to two thirds of the money" in a privately managed venture fund, up to 50 million pounds per fund, and takes a reduced share of the profits so that private investors earn more: "The additional profit goes to private investors as an incentive to invest into venture funds rather than, for example, public markets." A founder meets ECF money only by pitching an ECF-backed venture firm.

The regional funds follow the same pattern with loans as well as equity. The Northern Powerhouse Investment Fund II is a 660 million pound commitment and the South West Investment Fund a 200 million pound one, each offering small loans from 25,000 to 100,000 pounds, debt up to 2 million pounds and equity up to 5 million pounds. Applications go to the fund managers each fund appoints, not to the bank.

Two UK schemes put the order of events in writing. Innovate UK Investor Partnerships pairs an R&D grant with "aligned equity investment that is at least 1-2x the amount of grant funding", led by an approved investor partner with whom the company needs "an established relationship". The Scottish National Investment Bank's 2026-27 strategy sets a minimum round of 4 million pounds for its innovation mission, "with co-investors taking at least 50% of the investment round".

Europe: one direct route, many indirect ones

The EU's main exception to the rule is the EIC Accelerator, which a single startup or SME applies to directly. It offers a grant "below EUR 2.5 million" and equity of 1 million to 10 million euros from the EIC Fund, together as blended finance or separately. The 2026 budgets are 220 million euros for challenge calls and 414 million euros for the open call, with six cut-off dates through the year, the last on 4 November. UK applicants can apply for the grant only.

Most other EU money for small companies is indirect. InvestEU equity is invested in or alongside venture, private equity and private credit funds; eligibility is written for funds, and applications run on a rolling basis to 30 June 2027. EISMEA's SME pillar of the Single Market Programme, worth 1 billion euros for 2021 to 2027, funds services and networks such as the Enterprise Europe Network through calls for proposals rather than buying stakes. CINEA's Innovation Fund, financed from emissions trading revenue, gives large grants to low-carbon demonstration projects. The Commission's own page for small businesses says SMEs "can apply by responding to calls for proposals" and reach loans, guarantees and equity "via local financial institutions".

For a founder in Europe, that means two separate searches: the EIC for direct money, and the list of EIF-backed funds in their country for everything else.

The United States, Canada and elsewhere

The US splits cleanly in two. SBIR and its sister programme STTR are direct, competitive, "equity free" awards from 11 federal agencies. As of April 2026 an agency may make a Phase I award of up to 323,090 dollars and a Phase II award of up to 2,153,927 dollars without seeking SBA approval.

Everything else is leverage. The SBIC programme lends to licensed private funds to match the capital they raise, "typically, no more than 2x the amount of private capital", up to 175 million dollars. The SBA "doesn't invest directly", and founders find SBICs through its directory. The State Small Business Credit Initiative, a programme of nearly 10 billion dollars, aims to "catalyze up to $10 of private investment for every $1" and works through state programmes, of which venture capital is one type.

Canada's planned Growth Venture Capital Catalyst Initiative, set out in a March 2026 discussion guide, would put 1 billion Canadian dollars into funds of funds, with managers asked to raise "$3 from private-sector investors for every $1 of public-sector capital". The guide describes these terms as proposals.

Three other countries show how the dial can be set differently:

Scheme What the public side puts in Condition
Israel Innovation Authority Startup Fund A grant of 60% of a pre-seed round (up to NIS 2 million), 50% of a seed round (up to NIS 6 million), 30% of a Series A (up to NIS 15 million) Private investors must commit; no equity or voting rights taken
Saudi Venture Capital Company Up to 65% of a fund; up to 30% of a direct round Direct tickets from SAR 1 million
Singapore Startup SG Equity Co-investment "based on established co-investment ratios", direct investment and funds of funds A further S$1 billion top-up announced in March 2026

India's Fund of Funds for Startups moved to a second phase in April 2026, with a corpus of 10,000 crore rupees committed to SEBI-registered funds, which then invest in startups. It does not invest in companies itself.

What this means for a founder

The practical lesson is to reverse the usual search. Instead of looking for a public scheme and then an investor, find the investors who already hold public mandates.

  1. Ask each investor what public money they manage. An angel syndicate backed by the Angel CoFund or a Regional Angels partner, a venture firm with an ECF or EIF commitment, or an SBIC can bring public money into your round. They are allowed to say so.
  2. Line up the private lead before the public application. Innovate UK Investor Partnerships, the Israeli Startup Fund and the Scottish bank all require a private commitment first, and an unsupported application wastes a cycle.
  3. Use the direct schemes for what they are. SBIR, the EIC Accelerator and national grants are the only routes where a founder writes the application alone. They suit technology that needs proof before any investor will commit.
  4. Check where the money must be spent. Regional funds such as the Northern Powerhouse and South West funds invest only in companies based in their area, and the Saudi and Singapore schemes have similar conditions.
  5. Read the stake caps. The Angel CoFund's 30 per cent equity cap and SVC's 30 per cent round cap protect the founder from a public body becoming the largest shareholder, and are worth knowing when a syndicate proposes terms.

Tax reliefs sit beside all of this. In the UK the Enterprise Investment Scheme, the Seed Enterprise Investment Scheme and Venture Capital Trusts pay nothing to the company, but they change what a private investor earns and so make the private half of a co-investment easier to raise.

Two of the UK rounds we reported in October show how the pieces meet. SFC Capital, which describes itself as operating "the UK's leading SEIS Fund" alongside a follow-on EIS fund, led the seed round of the London company Obsero. Mercia, whose investment strategies include EIS and VCT funds, led the round of PlannerPal. In both cases the money a founder sees as one cheque from one manager is pooled from individual investors who each claim their own relief.

Programmes in our catalogue

All 71 programmes are listed on our startup funding programmes page, with the British Business Bank and its regional funds, the Gulf state investors and India's central and state schemes. The investors who hold public mandates are in our venture capital firm category, and the rounds that drew public or development money in October, such as those of Vates with Bpifrance and Finches with High-Tech Gründerfonds and Bayern Kapital, are reported on our funding news page.

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