But innovation usually comes at a cost and additional funding may be required to finance this. Whilst many businesses are funded by a mixture of share capital and loans, it is important not to forget that there are other sources of funding available to businesses.
With Brexit potentially removing some of the previously available EU funding, and the general uncertainty about the post-Brexit economy, it is becoming harder for nascent and developing businesses to get the funding they need from banks and other financial institutions.
Businesses are looking for other ways to finance their businesses and might not be aware of the availability of grant funding.
There are three main types of grant: government-backed grants; regional grants and local grants, and many of these are specifically aimed at innovative businesses.
In January 2017, following the Brexit referendum, the government issued a green paper titled, 'Building our Industrial Strategy'. The aim of the paper was to set out a plan for post Brexit Britain. It recognised that innovation is at the very heart of creating well paid sustainable jobs and driving future economic growth and acknowledged that more than 95% of all global development and innovation (by spend) takes place outside of the UK.
With this in mind, the government set up the Industrial Strategy Challenge Fund (ISCF). It will provide £4.7 billion of grant, loan funding and other support to finance investment into research and innovation over the next four years and will top up the core budget previously managed by Innovate UK (a non-departmental government body) and research councils (which will merge with the Research England to form a new body, UK Research and Innovation in April 2018).
Prior to the setting up of the ISCF, the core funding targeted mainly small and medium sized enterprises (SMEs) wanting to invest in any of the following four sectors or the ‘open programme’:
The 'open programme' target innovative businesses that either do not fall in to any of the above sectors or have high-potential ideas that are so new that no-one else is working on them.
The ISCF was set up to target the following six key areas:
Businesses can apply for a share of the available funding in a competitive application process. Apply via the application forms for live funding competitions.
Businesses wishing to apply for a grant should ensure that their proposal document includes the following information:
The proposals are reviewed after the close date of the competition and grants offered to businesses that submit the best proposals.
In addition to the government backed grants there are also a number of regional grants that may be available. The three largest regional grants are from the Welsh government, Scottish Enterprise and Invest Northern Ireland. Each grant provider has its own application process.
There are also a number of local grants available to businesses. These include funding from 'local enterprise partnerships' 'university enterprise zones' and the 'Regional Growth Fund'.
The network of ‘local enterprise partnerships’ (LEPs) provide not only finance to local businesses, but also advice and support to businesses bidding for government funding.
There is also funding from ‘university enterprise zones’ which aims to provide funding to local innovative high-tech businesses.
And finally, there are some government funded grants available from the Regional Growth Fund.
The advantage of sourcing grants locally is that these tend to be smaller in value and better suited to start-up companies and SMEs who are only seeking low levels of funding. Also, there is likely to be less competition for the funding and so these can be easier to obtain.
Businesses should not forget that grant funding may be available to provide finance, especially to innovative businesses is often either matched partly or totally to the actual innovation spend. Also, unlike loan finance grant funding is not repayable and effectively ‘free money’ to the business.
If you would like to know more about whether there are any grants that you can apply for, to or help with a grant application, contact us.