Last Monday, the early stage business community was greeted with a welcomed £1.25bn funding package from HMT, aimed at supporting businesses who were unable to access the CBILS support scheme.
I wrote a review of the package here where I surmised the support was most definitely welcomed, but the design of the support solved problems for only a portion of the businesses who needed it. The Future Fund specifically had a multitude of hurdles and not necessarily the best terms for businesses who were eligible. The hurdles limited business eligibility to the support. Our interpretation of what is known is available here if you are unsure on whether the Future Fund is suitable for you. You may also be interested in listening to our recording of a panel with some of the individuals influential in pushing the government to provide the support.
While the Future Fund took many of the headlines, the Innovate UK administered grant and loan support, which accounted to 75% of the government’s commitment, seemed to be overlooked. There seems to be a perception amongst some of the businesses I have spoken to that either the process to access grant funding, the accountability of having the funding, or the fact it comes from the government, makes it undesirable for those businesses to apply for. I personally do not see accessing grant funding in this way. While some people may be put off when they first see the detail required in a grant bid document, the actual application process and the reporting is not onerous, and to me is justifiable given the funding council need to validate how they put government funding to good use.
There are nine funding councils which sit under UK Research and Innovation, a government funded body which invests around £6Bn annually of taxpayers’ money into funding research and innovation. Innovate UK is just one of these funding councils, and is very proactive in investing in early-stage innovative businesses, but they are not the only council prepared to invest in innovative businesses, so don’t forget to check out the others for funding opportunities.
The new £750m Innovate UK funding available splits into £200m of accelerated payments to existing Innovate UK competition winners and £550m of new competition capital available. Innovate UK have already announced they are looking at reforming the process as quick as possible to assess and administer the cash into businesses. To me, this is both a positive step in the right direction and a huge opportunity for innovative businesses to access capital to support their business to continue growing throughout this pandemic.
Grant funding through Innovate UK and other councils are critically important to businesses and the UK economy. Successful and growing economies build through continual business regeneration. Regeneration built from innovation. Early stage grant funding allows entrepreneurs with good innovative ideas chance to share some financial risk to develop the innovation. To liken the early stage business to an engine, the pistons are the innovative ideas to be better than the current market offering, and grant funding is the oil that lubricates the ideas production into testing or into pilot and enables the pistons to move faster and faster.
While I cannot give broad advice as every business is different and unique, I feel businesses should make the most of accessing capital given to support the growth of your business and ultimately make the most of the raft of new Innovate UK capital becoming available imminently. For those daunted by the prospect of writing a bid, we are running a free-to-access funding readiness programme starting on 12th May via webinar with one of the focuses being how to write a compelling grant bid. You can sign up to the programme here. The programme also has a webinar looking at raising capital through a crowd-funding campaign.
Those who have read my last couple of blogs will notice a theme focussing on making early stage businesses aware of the capital and allowances they can access immediately. This is at a time when many early stage businesses I speak to are worried about the cash they have forming a long-enough runway to outlast the impacts of the Covid-19 pandemic. The challenge being the unknown of how long these impacts will reverberate around the economy. I feel there will be no switch which can allow us to return back to normal, or even the new normal, without seeing growing pains and further delays and economic challenges.
I will continue to write about the funding opportunities becoming available to early stage businesses, to keep you in the know. While I write this, a new 100% government–backed loan scheme, ‘the bounce back’ or microloan for loans up to £50,000 has been announced. This on the face of it also sounds like a good opportunity for early stage businesses to access some capital to support their business. While we wait for confirmed details on how this will work, I would urge caution in getting excited over the announcement until it is a little clearer. Expect a blog from me when we know more and what implications this has for businesses.