It was almost two years ago that the (then) Chancellor first mentioned innovation loans from Innovate UK, as part of the 2015 Spending Review. Since then, we have been working hard to develop a product that we believe will help businesses to scale and grow through innovation.
We have had lots of help from colleagues in the Department of Business, Energy and Industrial Strategy, the British Business Bank, UK Government Investments and HM Treasury. We’ve had most help, though, from innovative business leaders who have told us what help they need to meet their challenges.
Listening to customers
We have spoken to many businesses about what they actually do in the different stages of R&D, what they spend money on, where that money comes from and where they would like it to come from and how they get to customers. We have commissioned formal market research, hosted workshops, chatted at numerous events and run online surveys.
We have also listened to policy officials, investigated the financing offered by public and private sector financiers here and overseas, quizzed enterprise researchers, looked at impact evaluation reports and thought hard about the strategic direction of innovation support. (We’re talking about public money here, so iterating simple A/B tests with a minimum viable product wasn’t really possible.)
Where do innovation loans fit?
In our 2016 Delivery Plan, we talked about opportunity centric and business centric investments. Finding and proving a new idea, particularly using collaboration, is really risky. Grant funding for earlier stage R&D projects is the right way to encourage and de-risk this vital activity. Once that idea has been proven and (somewhat) de-risked, we can offer loans for later stage R&D to help the business to commercialise and to scale and grow through their innovation.
Loans will still deliver economic impact through innovation, but also make public money work harder and go further. Grants and loans are complementary.
How will innovation loans help and who are they for?
We believe that we have designed innovation loans to meet the needs of the innovative businesses who took the time to share their experiences with us. Innovation loans will offer affordable, patient, flexible – and yes, interest bearing and repayable – funding for later-stage R&D projects with a clear route to commercial success.
We will offer loans to growth-oriented SMEs through competitions to make sure that they are completely focused on innovation and growth. We will also have a strong credit focus to make sure that we offer loans only where they are suitable and where there is a real need for public support.
Who doesn’t love shiny new things?
I speak quite frequently at events with innovators, entrepreneurs and investors. My typically provocative line goes something like this:
I’m not really interested in how shiny that new piece of kit is that you’re developing (and I don’t understand it)… I want to know if your customers will buy it!
And now I’m at the point where I shall find out whether the time I’ve spent with colleagues polishing up a really shiny innovation loan will deliver support that will really make a difference to innovative businesses.
Innovation loans events
To introduce innovation loans, we are holding a series of events across the UK in late October and early November. These events are aimed at senior decision-makers (at the CEO / CFO / CTO level) in innovative SMEs, at investors (angels, VCs and crowdfunders) in innovative businesses and at key intermediaries in professional services firms and the public sector support landscape.
At the events we will explain the rationale for innovation loans and where they sit in the landscape of innovation support, outline the key features and obligations of the loans and explain how they will be delivered and operated. We will also be speaking about innovation loans at Innovate 2017 on 8th and 9th November at the NEC in Birmingham.
Where, when and registration
Innovation loans events will be held (in each case from 1:30pm to 4:30pm) in:
26th October - Newcastle
30th October - London
31st October - Manchester
1st November - Glasgow
2nd November - Birmingham
6th November - Cardiff
7th November - Belfast
We hope to see you there and to hear your feedback – and I hope you’ll be as excited as I am about this new addition to the support we can offer to drive innovation and growth in UK businesses.
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