R&D Grants: where the heck do I start? - 2

Updated: Nov 9, 2018

Please make sure to read the first part before this one: some important info there!

2- How do I fund my project?

The type of funding that’ll be available to you will very much depend on the stage of development of your project. Basically, the closer you are to market, the more funds are available. That is simply because it becomes easier to demonstrate the financial potential of your project, as investors need the promise of an ROI to be able to operate in the long term.

Before you start your project

The first question you need to ask yourself is whether you have a market. Of course, your idea’s brilliant, but who’s gonna pay to use your product or your service? and how much would they be willing to pay? Answering these questions will help you define your business model: are you going to sell to other businesses (B2B, “Business to Business”), to customers directly (B2C), or to customers via another business (B2B2C)?

I don’t yet have a proof of concept for my project - TRL 1 to 3

If your project is still pretty much nothing more than a good idea, you may want to give it some flesh.

For example, one way or doing it, if you’re a researcher, is to look into academic grants and/or partnerships with companies.

Innovate UK

If you’re a business lacking academic knowledge, one instrument you can use is Innovate UK’s Knowledge Transfer Network. KTN is a networking organisation and sets itself the goal of “(linking) new ideas and opportunities with expertise, markets and finance through our network of businesses, universities, funders and investors”. You do not get money directly from KTN, but you can develop a Knowledge Transfer Partnership. Here’s how it works:

  • The KTP is a three-way relationship between a business, an academic or research organisation (typically a university) and a postgraduate, known as an “Associate”.

  • The associate is hired by the organisation, but works for the business for the length of the KTP (they last from 12 to 36 months)

  • The associate brings the business the academic expertise that it may lack, thus improving its performance and helping it to become more competitive and productive.

  • the business has to cover a part of the costs (the salary of the associate plus the cost of the supervisor who oversees the scheme)

  • if the business is an SME, it has to cover a third of the costs, i.e. about £30.000 a year

  • if it is a larger business, it has to cover half of the costs, about £45.000 a year

Check out this video for an example of KTN:

The European Union

Horizon 2020 (H2020) is the European Research and Innovation programme; it has a budget of €80.000 (about £70.000) available until 2020. At an early stage of development, you could apply for one of their “Future and Emerging Technologies” (FET) grants, and in particular the FET-open programme.

As usual with H2020, FET-open is highly demanding. So here’s what you need to apply for a grant:

  • Radical vision: “the project must address a clear and radical vision, enabled by a new technology concept that challenges current paradigms. In particular, research to advance on the roadmap of a well-established technological paradigm, even if high-risk, will not be funded."

  • Breakthrough technological target: “the project must target a novel and ambitious science-to-technology breakthrough as a first proof of concept for its vision. In particular, blue-sky exploratory research without a clear technological objective will not be funded. “

  • Ambitious interdisciplinary research “for achieving the technological breakthrough and that opens up new areas of investigation. In particular, projects with only low-risk incremental research, even if interdisciplinary, will not be funded."

There are the three “FET gatekeepers”.

H2020 organises “calls”, each with their specific challenges and conditions. See here for a concrete example of one of these calls. The application must be submitted by a consortium of at least three entities from three different European countries.

I have a PoC but no prototype yet - TRL 4 to 6

So your idea’s working, but far from marketable? You need to demonstrate its traction? A number of funds can help get you to the point where you have an actual, full-scale working prototype.

Innovate UK  “drive(s) growth by working with companies to de-risk, enable and support innovation”. It is part of UK Research and Innovation and offers innovation loans (£50 million available over a two-year program).

These loans, reserved to UK-based SMEs, are meant to bring a project to the market. Consequently, you can use the funds to:

  • produce plans or designs for  the project (product, service or process)

  • develop prototypes and pilots

  • experimental production and tests

You apply for these loans by entering a competition. You can borrow from £100.000 to £1 million, to cover up to 100% of the eligible costs. The loans run for up to 10 years, divided into three parts:

  • an availability period of 3 years → you can draw down money for R&D without having to make repayments.

  • an extension period of 2 years (if required) → it gives you extra time to draw a route to market.

  • a repayment period of 5 years

NB: At this early stage, Horizon 2020’s FET grants are still available.

I have a working prototype and I want to bring my project to market - TRL 7 to 9

The European Innovation Council (EIC) pilot offers support to those “at cutting edge of innovation”.

Beyond the FET, already mentioned, the EIC falls into two programs: the SME instrument and Fast Track to Innovation (FTI).

The SME instrument

The instrument, with a budget of €1.6 billion (£1.4 billion), aims at funding a radical innovation that can disrupt established value networks and markets”.

There are two types of grants: the feasibility assessment (phase 1) and the innovation project (phase 2). A single company or a consortium can apply.

Feasibility assessment (phase 1)

The phase 1 grant helps businesses assess the technical feasibility and/or the commercial potential of a development, the outcome of which must be a business plan. The assessment, which typically lasts around 6 months, is funded through a lump sum of €50.000 (£44.000).

Innovation project (phase 2)

The second phase supports the innovation projects “underpinned by a sound and strategic business plan”. It funds the activities aimed at bringing innovation to a maturity enabling the product or service to get to market. As a consequence, this development lasts typically 1 to 2 years and the funding scale is from €500.000 (£440.00) to €2.5 million (a little over £2 million).

NB: it is not necessary to have had a phase 1 grant to apply for a phase 2 grant.

Fast Track to Innovation

The FTI scheme requires that the applications are made by three to five European entities. It offers grants of up to €3 million (£2.5 million) for close-to-market innovation.

Consortiums answer a call, the conditions of which are described in the Horizon 2020 Work-Programme 2018-2020

Here ends the second part of this presentation. In the third and last part of this series, we will deal with grants aimed at developing your business.

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