By Olaf Swanzy, Managing Consultant.
The primary aim of any Industrial R&D grant programme is to support technologically risky research from which new products, processes or services will emerge. In the majority of cases the receipt of grant funding is therefore used to accelerate product development allowing companies to commit the required resource (notably staff time) to a defined project, which if successful can significantly enhance a company’s competitive position.
The fiscal value of any grant is therefore a primary reason why companies commit the time and resource to the pursuit of grant funding. However, there are many non-financial benefits to the receipt of public finance which are often overlooked and, in some cases, offer even greater value to a business. This article explores some of the main ones:
1. Securing private funding
The receipt of grant funding can help leverage private finance – helping de-risk an investment decision for a private financier and/or support the likelihood of follow on finance for company scale up with comparable due diligence processes and investment criteria. In fact, a large portion of our clients use grant funding as a key stepping stone for securing private funding, many accrediting an initial grant to the success of Series A and B rounds.
2. Promotional/PR value
Similar to the above, the receipt of grant funding is effectively seen as a ‘quality stamp’ from a government body demonstrating a company’s commitment to innovation and the potential of the arising product. This has significant promotional/PR value and can significantly enhance commercial success.
3. Secure input from research providers
Although not all grants are based on collaborative research, if a collaboration is required to bring new knowledge and skills into a business or to gain access to external infrastructure, grants can be used to secure the input from research providers such as universities, funding their participation – the same benefit also applying to the use of subcontractors. Grants can also be used to gain the input of end users either as a partner or for user centred design in the workplan, bringing you closer to the ultimate customer of the arising solution and helping early adoption and an immediate sales channel.
4. Strenghten R&D capability
Grants can be used to strengthen R&D capability within a team supporting new recruitment and the upskilling of existing team members.
5. Understanding your market
Even if an application is unsuccessful, going through the grant application process can actually help a company better understand their market, the arising application providing a solid framework for a business plan or pitch deck.
6. Demonstrating a track record
Finally, being successful with one grant programme can actually help the successful attainment of future grants. Naturally each application is assessed on a case by case basis but if a funded project has been delivered effectively, the company is in a much better position to demonstrate a track record of grant management and the impact of previous grant funding particularly if previous grants can be attributed to commercial success.
The non-financial benefits of grants
There are a number of other benefits that could also be considered, however it is clear that the benefit of grant funding is not always financial. It is important that companies consider this when trying to decide the value of pursuing a grant and the resource required for the application process. It is also important that potential applicants also consider some of the benefits defined above when justifying the value of public funding and the ‘grant additionality’ argument which is common to most programmes.
With a 20-year track record of working with national funding bodies such as Innovate UK, PNO can help applicants through the entire grant acquisition process, from the identification of the most appropriate scheme to support a given project to reducing the time required in the application process and ultimately significantly enhancing the chances of a successful outcome.