Musical instrument company is one of first casualties from Government's Future Fund that supports small businesses affected by pandemic.

Taxpayers have lost £4.5m on a bankrupt musical instrument company, in the first high profile collapse of a business bailed out by the Treasury's Covid start-up rescue fund.

Administration documents for Roli, which makes high-tech keyboards used by musicians including Stevie Wonder and Grimes, showed that it owes £2m to the Government's Future Fund after winning support from the scheme last July. Another £2.5m is owed to HMRC.

The £1.1bn fund was launched to help start-ups weather the pandemic by borrowing money from the taxpayer, as long as it was matched by private investors. Loans of up to £5m are converted into equity stakes when a company next raises investment, with the fund taking ownership of shares at a 20pc discount.

Treasury officials revealed on Tuesday that the fund had already taken stakes in 158 companies, out of 1,190 that took loans.

However, the fund is also braced for failures from companies that fail to secure new financing. Roli, which had raised $75m (£54m) since it was founded in 2009, fell into administration last week after overestimating demand for its products and failing to secure new venture capital financing.

The taxpayer's interest in the company will be wiped out even though Roli's main creditor, the Silicon Valley investor Triplepoint, has recouped the vast majority of its lending.

Triplepoint's debt was secured against Roli's assets. The business is expected to receive £27m of £33.6m owed by Roli, which is being spun into a new entity called Luminary with backing from venture capital firm Hoxton Ventures. The deal will mean 68 staff including chief executive Roland Lamb staying at the company.

Roli's uncertain state had been highlighted before the Future Fund invested, when Triplepoint wrote down the value of its debt in 2019.

The documents show that other investors in Roli included Grimes, the Canadian musician and girlfriend of Elon Musk, whose real name is Claire Boucher, and the Royal College of Art.

Source- Daily telegraph