Small companies applying for UK innovation grants - what, why and how. £0.5bn of funding available to help technology-driven start-ups and established enterprises.

1. Innovation Grant Funding for SME’s
Alan Gould
Grant Specialist and Consultant Project Manager
17/05/2018

2. What we’ll cover
Innovate UK
What are grants and how they are delivered
Why you should apply
The application process
Delivering a grant project
Other funding opportunities
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3. … is now under the new “UK Research and Innovation” agency
… is responsible for driving growth through innovation
chiefly by distributing R&D grants from various government depts
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£2.2bn
awarded
8,750
companies
8new
jobs each
GVA
return of
7:1
Since 2007:
to providing and

4. What is Grant Funding for?
• Turn scientific excellence into economic impact
• Deliver economic growth through innovation
• Promote research/industry collaboration
• Support the UK Industrial Strategy
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… accelerate UK economic growth by nurturing high-growth potential SMEs in
key market sectors, helping them become high-growth, mid-sized companies
with strong productivity and export success…

5. Control
Benefits
• Opportunity to take bigger risks in
product development
• Access new markets more quickly
• Build supply chain relationships
• Provides stability and resource
levelling
• Helps to attract other business
investment
• IP and Equity not diluted
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© Nick Sturge

6. Drawbacks
Grants can’t be treated like other types of
business investment:
• The funding is provided to offset costs
incurred in executing a pre-defined
business-led project.
• Business priorities can change between
initial application and project end.
Cashflow challenges:
• Costs are incurred (by you) and then
(partially) reimbursed.
Timeline:
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M0
M1
M2
M3
M4
M5
M6
M7
M8
M9
Call Announced
Submission Deadline
Notification
Project Start

7. The process
https://apply-for-innovation-
funding.service.gov.uk/competition/search
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Manufact.
& Materials
£126m
Infrastruct.
Systems
£116m
Health &
Life Science
£116m
Open
£89m
Emerging &
Enabling
£56m
Industrial
Strategy
£270m

8. Eligibility and intervention rates
Grant rates by project type:
Projects must include an SME
Projects last between 6 months and 3 years
Projects above £100k and/or 12 months must be collaborative (except for Open competition)
Participation of universities and not-for-profit organisations capped at 30% of project budget
Each individual call can vary min/max sizes and participation requirements
Applicant Business Size
Fundamental
Research
Feasibility
Studies
Industrial
Research
Experimental
Development
Micro/Small (up to 49 staff) 100% 70% 70% 45%
Medium 100% 60% 60% 35%
Large (over 249 staff) 100% 50% 50% 25%
Universities 80% full economic costs (FEC)
Non-profits and public sector 100%
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9. How to apply – the application form
Typical Innovate UK format:
Question 1 Need or challenge
Question 2 Approach and innovation
Question 3 Team and resources
Question 4 Market awareness
Question 5 Outcomes and route to market
Question 6 Wider impacts
Question 7 Project management
Question 8 Risks
Question 9 Additionality
Question 10 Costs and value for money
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100 marks available
No weighting
50 Business Case
40 Delivery
10 Technology

10. Assessors
• Assigned from a pool
• Assessment is independent
• Between 3 and 5 assessments used to provide
averaged score
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11. Chances of Success
• Huge variation:
o 30% for highly specific call scope
o 2% for some Open calls
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Horizon 2020 example

12. Innovate UK – some statistics
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• Open calls are much more popular
• However, the quality thresholds are similar

13. Grants go to good proposals –
not (only) good innovation
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Thank you for your application. … Given
the widespread availability of "proper"
computers, the rationale for a device that
reverts to the early days of computing is
not persuasive.
The Raspberry Pi experience:
http://www.newstatesman.com/sites/default/files/ns_future_tech_supplement_nov_2016.pdf

14. Delivering a Project
• Grants are re-imbursement of costs incurred
• Costs must be:
o Incurred and paid within project start/finish dates
o Eligible
o Auditable
• Costs do not include:
o Profits
o Marketing, advertising, entertaining
o Legal
o Financing costs
• Majority of grants are covered by a State Aid Exemption
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15. Eligible costs
• Labour
o Must be paid via PAYE
• Not via dividends, royalties or fees
o Can’t include:
• Profit
• Discretionary benefits
o Can include overheads:
• 20% default, or higher if justified
• Non labour
o Travel, materials, and capital usage
claimed as incurred
o Subcontracting is fine, but needs to
be justified
• Work must take place in the UK
unless overseas subcontracts are
essential
• In-kind contributions encouraged,
but don’t offset grant
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16. A note on Cashflow
• Company must be able to be fund the balance of costs, and the
cashflow
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Example Cashflow:
24-month £480k project
70% grant support
£336,000 grant
- £186,000 cash position
£144,000 expended

17. Other products
Innovate UK: Innovation Loans
• Up to £1M to cover the costs of a product implementation project
repayable up to 5 years at 3.7% annual interest
Eurostars
• Open scope
• Collaborate with at least one other non-UK partner
• Up to €360k per UK partner and up to 36 months
Horizon2020
• SME Instrument: Early and mid-stage awards available, up to €2M Open
scope, 3 calls per year
• Large collaborations: participating as a junior partner can be fruitful
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18. Example: Zeetta Networks
• Participation in H2020 REPLICATE project
o 36 partners, €29.3M, from 1st Feb 2016
o Zeetta awarded €400k
• SBRI “First of a Kind” Deployment
• Phase 1: £50k for business case development
• Phase 2: £1.5m to fund a deployment at Ashton Gate
to open up the Smart Stadia market
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19. Where to go next
• Innovate UK Competitions
• Innovate UK Loans
• Eurostars
• H2020 SME Instrument
• lightholm.co.uk
• alan@lightholm.co.uk
17/05/2018