With a recession potentially about to bite and traditional finance sources beginning to get squeezed, some sustainable tech startups are struggling to fund R&D and bring their concepts to market. The solution could lie in grants – an area of the funding ecosystem expanding in response to the need for innovation to drive the economy and counter the climate crisis.
“The UK’s Innovation Strategy has put nature-based climate solutions and carbon capture and storage at the forefront, driving investment and grant funding in these areas,” says Chloe Sharp, innovation partner at GrantTree.
The main sources of grants for startups are Innovate UK, which runs competitions for business-led innovation; government departments including BEIS; and councils, regional growth hubs and Local Enterprise Networks. For some projects, grant funding is available from charities such as Nesta. Private companies also offer grants that align with their strategic focus, and to support their SME ecosystems.
“There’s always been a healthy volume of grants in the UK,” says Ciaran Burke, co-founder, Swoop Funding. “But the challenges for startups are finding them, navigating the application process, and sense-checking eligibility.”
Step one is identifying the right grant for your business. Innovate UK’s long-running scheme Smart is a popular starting point. “Smart supports industrial research through to prototype stage,” explains director for innovation finance, Scott O’Brien. “It’s a broad programme – any technology, sector or market you’re trying to exploit is typically within scope.”
In a contracting economy, accessing funding has become more competitive, and sector-specific or smaller grants may give startups better odds of success. “Our Fast Start programme provides up to £50,000 for short, sharp R&D projects focused on technologies with the potential to be game changing,” outlines O’Brien. “It has a shorter application process, and more of the capital is provided up front.”
Sustainable tech is an increasingly prominent application differentiator. “In open competitions, game-changing sustainability technology creates a strong case for a grant application. There are also themed competitions specifically for sustainability tech, focused on developing one aspect of the sector,” says Sharp.
“Innovate UK runs specific programmes around net-zero, cradle-to-cradle manufacturing, recycling technologies – areas of focus that came out of our future economy review,” adds O’Brien. Recent competitions have funded bio-based materials and manufacture; novel, low-emission food production systems; circular fashion projects; and net-zero heat and power upgrades.
Beyond sustainable tech-specific grants, sustainable solutions still gain traction. “Sustainability can be additive in terms of how you shape your application or your project,” says Burke. But avoid greenwashing, he warns. “The term ‘sustainability’ is so broad that grant agencies expect to see a lot of depth in terms of what you mean by it and how you quantify it.”
Grant applications can be complicated, requiring extensive preparation and legwork. This includes accessing pre-application support. “Don’t ignore the guidance we publish, which provides granular information on writing a successful application,” advises O’Brien. “We also run competition briefing seminars, while Innovate UK KTN, which connects startups with new partners and opportunities, publishes a good application guide.”
Practice makes perfect, and even a failed application counts. “It’s a useful exercise to apply for an Innovate UK grant,” recommends Burke. “You experience putting a grant application together, which is unlike any other funding application, and receive a feedback form with the judges’ comments. This is incredibly valuable, particularly for businesses that don’t get accepted.”
Showing commercial viability can help convince the judges, believes Sharp. “This includes expressions of interest from customers, and having a way to pilot the technology in the project to show if it adds value.” But don’t prioritise commerciality over innovation, warns Burke. “We see businesses getting frustrated because although they can show the commercial benefits of what they’re pitching, but that’s not what the grant agencies are looking for. They want to see innovation that’s going to step-change the status quo within that sector.”
Check the full terms of the grant you’re aiming for, as you may discover there’s a match funding requirement. “Sometimes securing the grant isn’t enough to unlock the money,” says Burke. “You have to bring your own investment to the table alongside it or raise that cash through alternative funding.”
And don’t leave it to the last minute. “We see a lot of applications come in in the final hours before cut off, when the competition has been running for eight weeks,” says O’Brien. “Give yourself time, read the guidance, answer the questions, use the support resources, and you’ll have a decent chance at a successful proposal.”
GrantTree’s tips for a successful grant application
- Use plain English: Avoid jargon or convoluted language which makes it difficult for assessors to understand what the project is trying to achieve.
- Show you’re serious: Provide customer research to illustrate demand. Demonstrate that you’ve explored other funding options and found that a grant is your business’s best option.
- Don’t rush: Writing grant applications takes time. A lot of research is required and you may need several redrafts. University involvement in the project can add weeks to paperwork lead times.
- Scope out the grant: Check the grant’s eligibility criteria and scope carefully to ensure it’s right for your business. A grant consultancy can help identify appropriate funding and build an application.
- Consider the timing: Is it the right time for your business to deliver a grant funded project? Do you have match funding? Grants have a long lead time and are typically paid in arrears, so are best suited to long-term ambitions.
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