An Introduction to Innovation Grant Funding

By Su Weeks, Grant Funding Readiness Advisor


Su Weeks is a Project Manager for hardware Accelerator and coworking space, Central Research Laboratory. A project management specialist, Su has been managing grant funded projects for many years across the innovation and education sector. Su has extensive knowledge of the innovation grant funding landscape, developing and writing compelling project applications, and the ins and outs of applying for and managing grant funding.

Since the early days of technology, government funding has been instrumental in funding innovation. Without government intervention, who knows if the internet would even exist (not to mention Apple, GPS, touchscreens – the list goes on). Bringing pioneering products and services to the market can take a long time, particularly when the fundamentals of the technology are still unclear, early pilots and prototypes can be complex and costly and applications and markets are uncertain at the outset. Therefore, early stage innovation can be a hard sell to commercial investors who want to see a relatively quick return on their investment.

This is where government steps in. By funding game changing innovation the government stands to gain a great deal, as well as the kudos of bringing world-class technology to the market, and the primary way the government supports innovation is through grants. Here’s what you need to know about grant funding for innovation projects…

What is grant funding?

A Grant is defined as ‘A sum of money given by a government or other organisation for a particular purpose’. In the UK there are many organisations awarding grant funding, including UK government departments and government affiliated organisations. Grant funds are usually allocated in response to policy aims and strategic objectives set by the government. Similarly, the EU allocates funds for its spending priorities in alignment with its four year financial framework. There are also charities, trusts and foundations that offer grants for projects that align with their specific aims, for example NESTA, the National Lottery, or the RSA.

What is innovation grant funding?

The impact of innovation and tech on society is wide-ranging. The correlation between economic growth and higher living standards mean, in general, that economic growth is a good thing: So, more innovation = more economic growth = good.

The main institution tasked with driving innovation forward is UK Research and Innovation (UKRI), which is a non-governmental public body governed in-effect by the Department for Business, Energy and Industrial Strategy. UKRI works in partnership with universities, research organisations, businesses, charities, and government to create the best possible environment for research and innovation to flourish. UKRI also has oversight of Innovate UK, which is another organisation tasked to ‘drive productivity and economic growth by supporting businesses to develop and realise the potential of new ideas...’ Since 2007, Innovate UK has invested around £2.5 billion to help businesses across the country to innovate.1

In the EU, the commission allocates a significant portion of its budget to grants and funds for innovation projects. Similar to domestic grant funding, the EU grants address the priorities of the 28-member states. Horizon 2020 is the budget allocation for implementing ‘Innovation Union’ the EU wide initiative for stimulating innovation for ‘smart, sustainable and inclusive growth’.

Wondering about Brexit? The UK government has guaranteed all funds committed by the EU prior to the UKs departure on 31 October 2019. Furthermore, if you choose to leave post-Brexit Britain yourself and move to another EU country, those funds will open out to you once again.

In a nutshell, the one thing all these institutions have in common is that they all seek to drive innovation for the benefit of economic growth – and therefore the innovation they fund needs to have a real market and commercial potential.

How can I access grant funding?

UK grants are advertised centrally on the Innovation Funding Service which can also be applied for online. The application process for each tends to vary.

Because grant funding organisations have specific priorities that they aim to address, the calls are often very specific. Current examples include funds for projects addressing healthy ageing, food production and agriculture, civil engineering and security. New opportunities are added regularly so it’s a good idea to keep up-to-date by registering for the Innovate UK newsletter.

Most of the Innovate UK applications follow a similar format, and the questions are not unlike those that would be asked by a potential investor:

Ask yourself these questions:

  1. Business opportunity
    Similar to a pitch to an investor, set out the problem you are solving and how you are solving it. The assessor needs to understand the problem and be compelled that there is a need for your solution.
  2. The market
    The assessor will need to be convinced that there is a market for your solution and that you have a clear route to market strategy – i.e. is there commercial potential? Claims should be backed up with concrete evidence using market data on the current market and market dynamics. Head to the British Library Business and IP Centre for free access to the latest market research publications.
  3. Exploitation
    Explain how you intend to exploit the outcomes of the project, include projections for sales and growth that directly link to the market opportunity described in Q2. The assessor needs to be convinced that your projections are realistic.
  4. Benefits
    Describe all the benefits of the project, and think broad! Remember this is public money and so the benefits at large need to be clear. Think about economic, social and environmental impacts.
  5. Project plan
    Time to get that grant chart prepped. Be realistic and breakdown your project into work packages: the devil is in the detail.
  6. Innovation
    Talk about the technical and commercial innovation of your idea. Be clear about the intended application of your project but don’t be afraid to talk about secondary applications – the wider the impacts the better.
  7. Risks
    Show you have awareness of all the risks and how you intend to mitigate them. It’s not bad to highlight a lot of risks, an assessor wants to be convinced you have awareness of all the risks and the ability to effectively manage them.
  8. Skills/ Project consortium
    Who are the project team, do you have the relevant skills and experience to successfully carry out the project – don’t forget to mention other parts of the supply chain such as manufacturers or customers you have engaged.
  9. Finances
    You’ll need to submit a detailed budget with clear descriptions. The assessor will be evaluating value for money, considering if the outcomes are appropriate for the level of funding requested, and also whether the budget is realistic.
  10. Additionality
    Explain why the project needs public funding, in other words, why it cannot attract traditional commercial investment. This is a requirement of all public funding grants.

Make sure that there is consistency across all sections of the application – show linkages across your responses to ensure a coherent application.

EU funding opportunities can be found on the Funding and Opportunities portal. At the time of writing, September 2019, there were 440 open opportunities, and it can take some sifting through to find relevant calls.

Is grant funding worth it?

As with all types of funding, there are things to consider when deciding if grant funding is suitable for you and your project. There are clear advantages to grant funding, but it can also bring some unique challenges.

Advantages of innovation grant funding

  • Cash in return for activities, outputs and outcomes: you don’t have to give away any equity!
  • Grants are non-repayable · No pressure from hard-ball investors: there is more focus on long-term financial sustainability, scalability and more tolerance for failure
  • Depending on the grant, it may come with valuable complementary support such as mentoring, access to facilities, promotional opportunities

Challenges of innovation grant funding

  • Finding the right opportunity: grant funds can be extremely prescriptive
  • The application process can take a lot of time and resources, and the success rate tends to be low due to high levels of competition
  • Often grant funding requires match funding. In other words, the grant will only cover 70% of the project costs – it can be challenging for strapped startups to find the available cash for the match and if you do have it, it means that cash is less flexible. If you are lucky enough to find match from another organisation you may have double the reporting requirements
  • The project management requirements, reporting and audits can be demanding and place a heavy administrative burden on your team
  • Some funds are restrictive, and mismanagement of funds can expose the organisation to risk
  • In some cases, grants can only be claimed quarterly in arrears – this can mean cashflow is difficult to manage
  • Grant funds are almost always time-limited so it’s important to consider financial sustainability beyond the funding period: reliance on grant funding can lead to complacency
  • The state aid implications of public funding can be very complex and you may need to get specialist legal advice to mitigate the risks of falling foul of the law

Grant funding is intended for innovation that is not suitable for traditional commercial investment. If your project is not a typically investable proposition, but it will have wide reaching potential benefits then grant funding could be for you.



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