Grant Funding: Don’t ask How, ask Why.
One of the most common question we get asked is “what grant funding is available?”. In all honesty, funding isn’t always what the client needs. This is why we usually answer with the question “it depends what you want to do”.
Our first step is to sift those who have a requirement for funding which is aligned with their plan and strategy. Too many people seek funding because they believe money is the solution to their problems. While money may be the solution they seek, the better option is to pursue revenue and not a grant. A grant is a means to do something which increases your ability to generate revenue or increase profit.
Grant Funding: A little history
Many modern schemes tend to fund a third party to perform work on the party’s behalf. We’ve heard many whinges and complaints about this, but think about the old analogy about fish and a rod.
The purpose of many of these funding schemes is to allow you to engage expert advice at a reduced cost. The plan is that you’ll be so impressed, you’d be prepared to pay full rate next time. This puts the onus on the consultant to impress, and hopefully, everyone wins. More often than not you do have to contribute a cost, but the subsidised support is usually high. Anyway, business isn’t meant to be free – quite often, you have to take risks to reap rewards!
So to start, rather than thinking about what grant funding you need, think about what you really need it for. Could you be spending that time you use chasing grants, to generate business instead? Can a third party help you in one area, so you can divert funding to another? Funding can be great – as long as you spend your time and pennies wisely.
Does grant funding support or stifle Innovation?
Companies that don’t need funding are a lot more successful at innovating than those that do. This may either sound obvious, or alternatively may stink of the age old “rich getting richer” analogies. However it’s a fact of life, so we need to get our businesses in a position where they’re not grant dependent.
Let’s look at this in a little more depth. What we need to consider here is the portfolio of innovation activities within an organisation. Companies that invest in a philosophy of growth through innovation are more likely to have a wider portfolio of innovation projects. Newer companies and those with more limited budgets are more likely to have a very narrow portfolio. This is often focused on a single activity or project. Putting this as simply as possible, betting on ten horses is much more likely to present a return that just betting on one. That said, you’ll have more losses too.
The public sector support conundrum
This is the precise reason that the return on investment on innovation projects from the public sector is low. Public sector projects either target or naturally tend to attract the smaller and new-start companies. As such, they often don’t break-even when considering the real return on investment. Many would argue this, but having worked on public sector project and audits, I have seen how the figures presented for projects can vary from the real commercial impact. Measures typically tend to address factors such as GVA and jobs created. Unfortunately, many of these metrics may well have been achieved without the public investment.
InnovateUK – the knight in shining armour
Either way, let’s get back on track. In my personal opinion, the only direct “innovation grant” that has a significant impact on specific and single innovation projects is the InnovateUK family of grants. Of course, I’m not considering R&D Tax Credits as a grant here – that’s a separate subject altogether. The main reason for this, is that it sifts out the stronger projects, demanding significant match from the applicant. Of these grants we’ve helped secure the majority have resulted in significant commercial impact, which wouldn’t have been otherwise achieved. It’s also led to the company investing more of it’s own money in R&D and Innovation as a result of the benefits realised.
There are many examples of smaller projects having an impact. These include those through ERDF and academic funding sources – but the return on investment is significantly lower. The main reason for this, is that the sum provided tends to range between £3k and £5k, which obviously limited what can be achieved.
Back to the fish and the Rod
So let’s go back to our main question and our fishy proverb. What’s the difference between the InnovateUK grant and the smaller grants – other than the value? The main thing is that the smaller grants tend to be used to buy something – consultancy, product development, etc. You get this “something”, but you learn little other than whether your idea works. If you’ve needed funding to get this “something”, you’re now needing to access more finance for the next stage. And please don’t think that because you’ve spent a £3k grant on a prototype, the investors will come flocking. Based on experience, the chance of that is probably simmering at just under the 2% mark.
The InnovateUK grants – along with those who spend smaller grants in a smart way – allow you to learn. You’re not just buying the proverbial fish, you’re buying the best rod you can get. And, you’re also getting top notch lessons thrown in for free. this is precisely why companies coming off the InnovateUK system tend to invest their own money in more corporate innovation and R&D projects. The same can be said of companies that invest their smaller grants in training to improve their innovation skills, capacity and approach – rather than buying in a specific and singular solution which may only lead to further barriers.
Grand Funding – the point of last resort
In a nutshell, larger companies like grants, but if they can’t have them, they find another way of doing what they need to do. This is the mentality that the smaller and newer companies need to adopt to become successful in innovation. Investing in innovation skills development is often a much more robust investment than investing in third party support for a specific innovation project, and can help organisations become innovative about how they approach problems and opportunities in general – the rest will follow.
Are you applying for the right type of funding?
The headline might be a seemingly random and obvious question, but at the time it was asked it was extremely important and relevant. I was presenting at an event in the University of Central Lancashire on the topic of business funding. The event attracted a great mix of entrepreneurs, many of whom were seeking funding. A few of the businesses had strong social targets, with a small number frustrated that they had problems accessing certain business grants.
I was explaining that much of the funding is linked to jobs created and increase in factors such as GVA. Suddenly, I was asked the headline question – “so creating jobs is more important than saving lives?”. The answer in this case is yes, it is.
Before you judge me on that comment, please consider the context. You’re applying for funding and the judging panel have a list of criteria against which they will assess and mark your application. It’s most likely that either “jobs created” or “increase in GVA” are on that list. However with regard to typical business support grants and funds, “human lives saved” is unlikely to feature as a ranking measure.
The most important thing when writing an application is knowing what the funding body wants to achieve.
What’s my point here? It’s quite straightforward. Whatever fund you’re applying for, the first thing you need to do is read the application criteria well and make sure that you’re delivering what they’re asking for. Tell them what they want to know and make their job easy. Too many people tend to create irrelevant measures that aren’t meaningful to the project or assessor. They may deliver something meaningful in life – such as lives improved or saved – but if it’s not on the assessment criteria, it’s not worth mentioning.
The punchline here is think about what you’re chasing before you commit time you’ll never be able get back – especially if you could have spent doing something more useful for your business. Do you fit the fund you’re after? Can you meet their assessment criteria? Do you deliver the targets they’re seeking? If you can say “yes” to most of these, you’re on the right path.
Richard Harrison delivers Geminus Training’s “How to find and win Grant Funding” course. This helps you identify what funding streams are best for you and how to apply for them. For further information, please contact Richard via a direct LinkedIn message or the contact page on the websites below.
If you’d like to know more about how these courses can help your business prosper, please feel free to contact me.
For more information on Geminus Training please click here: http://geminustraining.com
To find out about our ep!c training please click here: http://www.releaseyourepic.com
To find out how to reclaim the cost of your technical developments and innovation please click here: RandD Tax Claims – Home Page