Tips for growing your business: grant funding
History has shown that economic downturns can, and often do, breed successful and long-lasting companies. Jonathan Hollis, Managing Partner of Mountside Ventures, sets out how growing businesses can access grants.
Grant funding comes from a range of awarding bodies, in different shapes and sizes, across different purposes and industry focuses. They can come from governments, where they are normally allocated in response to policy aims and objectives (e.g. driving economic growth), or from other organisations such as charities, trusts and foundations in response to their own strategic objectives. We will focus on cash payments in this article.
Direct grants are cash awards. They do not lead to any equity dilution, interest payments, or paybacks. These typically require matched private funding, and will have some restrictions on how the money is spent.
Factors to consider
The eligibility criteria varies according to each grant scheme. In your applications, you will be required to outline:
- The purpose and objectives of your business
- Your sector
- The size of your company
- Where you're based
Although grants can be a fantastic way of growing your business, there are a number of limitations to take into account:
- The lengthy application process can drain some of your resources away from your core activities
- The requirement for match funding means that you will still need to cover part of the costs yourself or identify private capital to help
- Once you're received the grants, you may encounter complex and time-intensive reporting requirements
- The grants are often time-specific, so you will need to plan for the future when the grant has been fully allocated
If you’re a company based in the UK and are focussed on innovation, the UK government provides funding through Innovate UK. Each programme has specific criteria, so make sure you take the time to find the programme that best fits your business’s objectives. There are over 30 active funding calls right now!
Local Enterprise Partnerships (LEPs) are business driven partnerships between local authorities and businesses in England. You can search for local schemes using the Finance and Support Finder. These local schemes are an attractive source of grant funding, as the more local the awarding body, the faster you will likely receive the money. Have a look at this map to find your local LEP.
European governmental support
Although we have an interesting relationship with the EU, the UK is hopeful that businesses will be able to benefit from the Horizon programme in 2021, although this is still uncertain. The Horizon 2020 programme has been established by the EU to help push Europe’s research and innovation. If you’re a UK-based business, this programme would support your development and innovation, whilst also giving you access to new markets. Many different schemes make up Horizon 2020, so have a look at which funding scheme suits your business. Currently, the extension of the 2020 programme is open to UK businesses.
Securing a grant
Once you’ve done your research and decided on a grant that suits your business’s own objectives, there are several steps you can take to give you the best chance of securing one of these awards.
- Have a clear business plan: Tailor your plan to the one you’re applying for, including a detailed breakdown of how you plan to use it and how it will help you meet your business’s (and the grant’s) objectives. The more detail you put in, the more likely you are to get selected.
- Emphasise your experience: The more credible you sound, and the more you can leverage relevant experience, the higher the chance of securing a grant.
- Bridge the gap between the grant and the matched funding: Ensure you have the capability to invest the amount that it requires. For example, Innovate UK is typically 70% of direct costs, paid quarterly in arrears. Some local funding is only 30%, whereas some of the larger EU funding is 100%.
- Research the awarding body and ensure your application is in scope: If you’re to make a successful application, the research process will be fairly time-consuming; if your business is just starting out, you may find this time better spent on other projects. The objectives set out in each grant can be very niche, therefore ensure that the grant application is clearly in scope and tailored to the competition.
- Get your application in early: The application process will vary with the awarding body, but many grant issuers (especially local funding) will have a finite amount of cash they’re giving away. Therefore, make sure you get your application in as early as possible.
- Be aware of the timelines: Getting your hands on a grant can take anywhere from a couple of weeks to a few months. If you’re applying for one from a local awarding body, you should have it within a matter of weeks, whereas governmental awarding bodies could take up to a few months.
Jonathan is the Managing Partner of Mountside Ventures, a company specialising in helping early stage companies raise their next round of funding. Previously, he co-founded one of the Big Four’s early-stage propositions. He is an ICAEW Chartered Accountant.
About Mountside Ventures
Mountside Ventures is on a mission to optimise the fundraising process for European startups and investors. They help the most ambitious entrepreneurs raise their next round of funding and connect the most promising Venture Fund Managers with forward-looking Limited Partners.