A common question clients ask advisers like me is: what sort of funding should I go for? I flip it back to them and ask them these 7 questions.
As in any commercial situation the applicant needs to start by putting themselves in the shoes of the people who will be parting with their cash and ask “Does the product or proposition that we are offering match what they are looking for”? Does it do the job for them?
It’s important to research and understand what drives each potential funder
The stage of the innovation dictates who funds and why any funding may be available. The above diagram illustrates the various technology readiness levels as widely agreed.
Levels 1 – 3 shown on the left are very much about blue sky thinking and early research and would typically be carried out in universities and research establishments and funded by research councils and the like. As the development moves further to the right toward Level 8 & 9, nearer and nearer to commercialisation, the more it is expected that industry and those that will reap the rewards will bear an increasing amount of the costs.
Where funding tends to be available is around Levels 6 & 7 where the project is about showing that the technology works in a real situation.
A grant application is simply the route to convincing funders that their money will be used wisely.
Following on from the above consideration of resources, nearly all grant funds available are “match” funding which means that the funder makes some contribution but the beneficiary pays some too. The intervention rate can vary dependent upon the scheme, the size of the company, its location and a host of other factors
Sadly, no-one just comes along and hands over cash! Some schemes will pay a proportion of costs up front but generally expenses must be incurred and proven before being able to claim them back so understanding the impact of this on cash flow is critical.
Making the innovation journey can be an exciting and fulfilling one but, at some point, it’ll become time to move away from the theoretical and show the idea to the world. Many innovators become so embroiled in their ideas that they forget about the customers who, ultimately, must need or want their solution and will be willing to pay for it.
Sometimes the best ideas fail because they simply cannot be made at an acceptable cost so a realistic and well thought through business model is needed.
And then, as already stated, no one is going to simply give away public money, the beneficiary has to work for it. Generally the more funding sought, the more detailed information will be required.
A decision must be made as to whether or not the organisation has the time and skills to do this. If not, there are outsourcing solutions available. However the information will still need to be provided.
If there are deadlines, and there often are, all the information required needs to be available in time. It’s not necessary to get the application in on the very last day at the final hour (!) and last minute rushes can cause problems with IT. For extra insights it’s worth attending any relevant events such as the briefings that Innovate UK hold around the country as they launch each funding round.
And finally, as illustrated above, applying for grant funding for an innovation can be a frustrating process and, given its often competitive nature, may not be successful. So, how else might you fund? From internal resources, from friends and family? By borrowing? Or taking investors on board? And don’t forget that R & D tax credits can provide a significant contribution from HMRC.
EEN Advisors can offer support in identifying suitable funding options available for your innovation at European, national and local level.
Contact the EEN team for further information.