Funding your latest innovation can quickly become a costly process, therefore it is vital as a business that you take advantage of any funding opportunities that are available. Our simple guide outlines four methods of funding that can help your business.
INNOVATE UK GRANTS/GOVERNMENT FUNDING
One of the most effective ways to fund your project is by taking advantage of one of the number of government schemes available. The most notable of these is known as Innovate UK.
Innovate UK is a government-funded organisation providing funding and support for businesses in the UK to develop new products and services. Funding options are available in several forms, including grants, loans and equity investments which can be used to support research and development, prototyping and the piloting of new products. With grants ranging from a few thousand pounds, to billions of pounds, these are an extremely valuable method of funding your idea and subsequently give your design great credibility.
There are two main variations of Innovate UK funding; competitions where businesses pitch against other ideas to win funding associated with specific project titles, such as solar technology or power-saving solutions, or Smart Grants which can be open to any project and are much more generic. Typically, Innovate UK funding is match funded, meaning that any money granted as part of the bid must be reciprocated as an investment by the business that won the bid. For example, if you entered a bid to win £200,000 of investment that was 50% match funded, Innovate UK would expect your business to also invest at least £100,000 of your own money in return.
Duku has been involved in Innovate UK-funded projects for both clients and our own projects over the years. We have helped to win six bids for clients in a wide range of industries totalling over £5 million, as well as two successful bids of our own.
Winning funding can be a particularly challenging and competitive process, therefore, it is vital you give yourselves the best chance possible to stand out from the crowd with a compelling design. Duku’s experience with Innovate UK gives your business the best chance of achieving the highest possible score in your pitch, ensuring you are in an advantageous position to win the bid. Our design team can visualise the intended design, establish the production costs and identify potential Intellectual Property to ensure your application answers all the important questions.
REGIONAL GRANTS
Regional Grants are provided by local or regional government bodies, or by organisations that focus on supporting businesses in specific regions of the UK. These are another brilliant way for businesses to fund their product; in England alone, RGFs have invested over £2.6 billion in innovation. There are a variety of regional grants available depending on where your business is located, so it is best to contact your local business hub first to gather more information.
As with all methods of funding, your project needs to be compelling and thoroughly considered in terms of the production viability and market potential in order to stand a good chance of being eligible for a regional grant. The competitiveness and level of grants available will be dependent on your region.
In Gloucestershire, where we are situated, the Growth Hub, in addition to a number of Local Enterprise Partnerships (LEPs), including, University West of England and the University of Gloucestershire offer resources and funding opportunities. Last year we were fortunate enough to work with UWE, who provided funding to help develop our accessible charger project. The subsequent benefit of this was that we were able to access their facilities and harness their expertise which was very expensive to do through commercial equivalents.
RESEARCH & DEVELOPMENT TAX RELIEF
Research and Development (R&D) reliefs/credits are available to support companies that work on innovative projects in science and technology.
As a business that is developing a new product or expanding its project range, it can be highly beneficial to utilise the government's tax relief scheme for research and development by claiming back a portion of the costs associated with R&D activities. This can include costs related to product development, such as design, prototyping, testing, and product improvement.
We recommend that our clients use a specialist tax accountant such as Crowthers Cheltenham to assist with recovering costs associated with R&D in order to ensure a submitted claim is thoroughly evidenced and the amount that can be reclaimed is maximised.
ANGEL INVESTORS & VENTURE CAPITALISTS
Unlike the previous methods identified, investors will likely ask for a percentage stake in your business or a cut of the product's profit in return for their investment.
As a business, it is important to establish whether this investor will be a good fit for your organisation: Is the investor simply providing finance for the next stage of the project, or will they make fundamental decisions regarding the product?
If potential investors are taking a more hands-on approach, you need to make sure they are a good cultural fit and provide knowledge in areas in which your business may need some support.
With Duku’s help, we will ensure your design is thoroughly developed de-risking the investment to a funder. Thorough prototyping and working with manufacturers early in the process as well as test houses and our Intellectual Property experts will give investors confidence the project has been considered from every angle.