https://innovateuk.blog.gov.uk/2018/02/07/its-a-great-time-to-be-looking-to-fund-your-innovative-business/

It’s a great time to be looking to fund your innovative business

Innovation was one of the buzzwords of 2017 as it was used to try to make the ordinary seem appealing.  Real innovation – taking disruptive ideas that are new to the market all the way through to commercial success – is a really risky activity.  It can deliver huge potential for growth, though, so it is worth investing in.

Supporting such a risky activity – particularly where it is based on cutting edge technology that requires investment in resources for research & development – is not right for every source of finance.

Graph with rocket showing upward trajectory

You need to understand where specialist investment might come from for your growth business, there are two main sources of external finance for innovation:

  1. Equity investment from business angels, crowdfunders and venture capital firms
  2. Public sector funding from organisations such as Innovate UK.
Private sign

Private investment is up

Equity investment in tech is booming in the UK.  Data compiled by PitchBook for London & Partners shows £2.99b of investment in UK tech businesses in 2017, almost double the figure for 2016, almost four times the amount invested in Germany and more than France, Ireland and Sweden combined.

80% of this investment (£2.45b) went to firms based in London.  Financial Technology and Artificial Intelligence investments led the way.

The Government’s Industrial Strategy also signalled a commitment to increasing support for investment in R&D.  An additional £725m was announced for six new challenge areas and two pioneer challenges to add to the £1b committed to the first six challenges in the Industrial Strategy Challenge Fund.

This support will take areas of challenge for society and the economy, where the UK has great capability, and help to turn technology into products and services that can solve problems and grow the UK’s economy.

The grant funding for this R&D is available through competitions to identify the highest quality innovations with the greatest potential.  Collaborations with researchers and between large firms with resources and smaller firms with innovative ideas will be at the heart of this.

The challenges cover areas such as:

  • Advanced manufacturing
  • The Future of healthcare
  • The Energy revolution
  • Future mobility
  • AI and data-driven economy
Public investment

Public investment is up

At Innovate UK, we are also piloting new initiatives to help innovative businesses.  Through our investment accelerator, we are creating partnerships with VCs to use a combination of public and private money to identify great new ideas and fund the businesses developing them.

Through our £50m innovation loans pilot, we are providing affordable, flexible and patient finance for later-stage R&D with a clear route to commercial success in businesses seeking to scale and grow through innovation.

Innovation is risky, but Innovate UK wants to share some of that risk to promote growth in the UK.  Investors want to take advantage of the opportunities from it to help create value.  As you look for funding for your innovation, remember to ensure there is a strong match between your technology and the market and to understand the criteria of funders to give yourself the best chance of success.

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