So. You’re interested in government funding? Maybe you’ve developed or had an idea for a project at university and you’re unsure how to give it legs? Fortunately there are some great schemes out there, which will help get your fledgling idea off the ground and grow it into the albatross you know it is.
This article will help you map out the main 5 sources of funding we would recommend you explore, to help you complement your crowdfunding campaign, or any other financing routes you choose to explore.
Tip #1: Take advantage of Startup Loans
Startup Loans are one of these funding options. They are designed to help entrepreneurs get their ideas off the ground with unsecured debt financing (i.e. you don’t need to risk your house to get it!), which can slot nicely into your crowdfunding campaign, by acting as a good launchpad to boosting your business prior to seeking crowdfunding.
As well as providing a free template to develop your business plan, once successful you’ll be paired with a mentor who’ll be able to provide support as you grow your business. This can be very useful if you have not had hands on experience in running a company before.
The Start Up Loan Company also has a number of regional partners who provide the same service under the same terms and conditions, so if you need help in getting your business off the ground, startup loans could be a great solution. They are open to a wide range of people too – anyone over 18, planning to start a UK business, or have started one 0-24 months ago can apply!
Tip #2: Ever heard of Innovation Vouchers?
Here’s another useful bit of government funding: innovation vouchers. Like with startup loans, you can use those to get an expert to help you craft your pitch and get the most out of your fund raising.
The scheme offers a £5k “voucher” that you can use to pay an external consultant. It’s really easy to apply to (30 minutes or so), and successful applicants are picked from a ballot.
It’s worth noting the money has to be used to pay an external consultant, not yourself. Similarly to start up loans, the voucher could be used to develop and build your campaign, making it look like a solid investment before you seek crowdfunding.
Tip #3: SMART Grants
The grant scheme SMART, from Innovate UK, offers match-funded grants from £25k up to £250k for step-change projects in areas of science, engineering & technology. If you are developing something super cutting-edge, this could be a good route to explore.
SMART has a bi-monthly open call for pioneering technology projects, as well as regular thematic calls, like the Biotech, Energy and Agri-Tech Catalyst awards supporting feasibility studies and collaborative R&D projects.
(Note that currently, Innovate UK has suspended the SMART competition March 2016 deadline while considering the impact of the recent comprehensive spending review. We understand that they will announce an update in March / April 2016 but when SMART, or another iteration of SMART, becomes available, is will probably have a similar format.)
Tip #4: R&D Tax Credits
R&D Tax Credits are a government tax break for businesses investing in research and development.
If your company has built software from the ground up, constructed a technology solution or overcome technical challenges in the build, then you should investigate whether R&D Tax Credits can help you and your business.
When ‘R&D Tax Credits’ is mentioned, people’s eyes tend to glaze over – and who could blame them? It isn’t the most glamorous dinner-party conversation but when it comes to R&D Tax Credits, the beauty is in the eye of the beholder; once you can see past the dry exterior of government jargon and into the juicy potential that R&D Tax Credits offers, you will view them not as a dull government tax break, but as an excellent source of alternative funding to supplement your other streams of financing.
From a crowdfunding perspective, there are two important angles that R&D Tax Credits are relevant from: for past work and future work. Most crowdfunding campaigns are for very early projects, but there are also quite a few that are for advanced projects that are basically doing pre-sales. For those, R&D Tax Credits can be applied for immediately to give an instant cash boost that can help tide the company over until the crowdfunding campaign concludes (and if you work with GrantTree, we can even advance part of the tax credit up front so you get the cash much quicker). From a future perspective, so long as you’re confident that the project will qualify for tax credits, you can count on a 15-33% cash boost coming in after the end of the financial year, which does make a fair bit of difference!
Tip #5: The Stealth Funding
Ready for your bonus tip? This final piece is about maximizing what you already have; make the most of the free workspace that universities offer!
One of the most subtle ways the government funds your business is through providing you with the facilities usually taken for granted at universities: the equipment, technology, space and connections which actually really mount up once you’re in the ‘real word’.
To put it in context, we have just opened up a co-working space called Treehouse, which offers some hot-desking for £350/month, per desk. This is in line with the industry average. So use your free university space to its maximum effect! Avoiding spending £350/month already saves you £4,200 alone per year – not to mention the more high-tech offerings universities have.
So make the most of what you have access to already – as the old adage goes: “you don’t know what you’ve got till it’s gone”.
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