First things first: ladies, let me give you my sincere congratulations for stepping on the entrepreneurial path and sticking to it. I’m personally convinced it’s the most rewarding professional journey possible to take.
Secondly, if you have managed to start your business without any external investment and are growing it organically, my hat off to you. I’ve been lucky enough to develop my business in this way, and couldn’t be happier about it. Since I work with plenty of technical product companies in need of upfront investment, I completely appreciate it’s not possible for everyone.
However, there are ways to obtain funding to support the growth of your business without sacrificing equity or compromising its strategy to help fulfil someone else’s agenda. At GrantTree we work a lot with government funding and I’d love for you to benefit from some of my knowledge. Because of this I decided to put together this quick list of tips to help you decide which schemes your business may be eligible for, and figure out how to obtain the finance.
It’s by no means comprehensive, so please do feel free to add a comment below if you have come across a little known funding scheme that could be useful to other enterprising ladies on Prowess.
Naturally, since we work with IP based business (mostly to do with technology), the schemes I have the most in-depth knowledge of are those relevant to companies undertaking scientific and technological R&D. This is the reason why the list starts with a few of those, before going on to schemes I’m simply aware of – or have used at GrantTree – that are unconnected to product development. If your company has nothing to do with science and technology, simply skip the first four points.
I do hope you will find this simply helpful. Go to my contributor’s profile to email me any questions about the below.
1. Technology Strategy Board – look inside the UK first
The mission of this funding body is to support scientific and technological innovation in the UK.
If your research and development is taking place in this country, make sure you’ve taken advantage of finance available through the TSB. As opposed to EU competitions, TSB’s grants rarely require you to collaborate with other companies to be in a position to apply. You will have to have some capital readily available to cash-flow your project though (be it investment, personal savings or even loans) as nearly all of the TSB’s calls are match funded.
If there are no relevant one-off theme-specific competition calls currently open, consider Smart Awards, with up to £250k worth of match funding available per project. This is an ongoing call with deadlines every second month throughout the year (upcoming deadline: 27.03).
If you are early stage in your project and a small injection of cash (such as £25k) is all that you need to progress, look into Feasibility Studies, 75% match funded, with simpler application process.
2. EU funds – big money for the hungry and the collaborative
Another stream of funding to be aware of is European research funding with plenty of different programmes, such as recently announced Horizon2020. There is 80bn Euro available to innovative companies in different sectors, particularly those collaborating with other international parties. You can check out the online manual and reference docs, as well as use the financial viability self-check here. The competition calls fall under a few wider topics, such as Care or Health Co-ordination Activities.
3. Trust funding – trusted by savvy entrepreneurs
If neither UK Government nor EU funding are well aligned with the type of your research, consider applying for funding through charitable Trusts, such as the Wellcome Trust. The London based Trust operates globally with focus on resolving five key challenges (all health/bio science related):
– Maximising the health benefits of genetics and genomics
– Understanding the brain
– Combating infectious disease
– Investigating development, ageing and chronic disease
– Connecting environment, nutrition and health.
With £13bn at its disposal (and about £600m invested every year), the Wellcome Trust is the largest non-governmental source of funding for biomedical research that supports organisations as well as individual researchers. Upon success of the funded project, the Trust will ask for a share of income generated from it or a small equity stake to generate funds that will help it invest in further projects.
Trust funding is also available to very early stage entrepreneurs, not necessarily involved in technology/science oriented ventures. If you are between 18 and 30 years old and would like to set up a business but not sure where to start, check out The Prince’s Trust for advice and mentorship, as well as finance.
4. R&D tax credits – extending your product development budget
If you are an IP based business, make sure to maximise your return on R&D tax credits by working with someone who is aware of the latest changes in the HMRC legislation. You can normally recover 25% of all the in-house costs related to R&D and around 15% of any subcontracted labour that took place in the last two completed financial years.
Based on our experience, plenty of IP based companies include their R&D tax credit claim in their annual product development budget since the scheme is very reliable and can be taken advantage of every single financial year. At GrantTree we have worked on this with at least 200 companies to date, and haven’t yet had a rejected claim.
5. Startup loans – a small injection of cash to get you started
Startup loans is a great scheme since it plugs a serious funding gap amongst very early stage startups, virtually unfundable by investors. The average loan size is £6k but you can borrow anything from £500 to £25k based on your business plan and financial projections.
6. Crowd funding – monetising your social profile
There is a lot of buzz on the startup scene about crowd funding these days. It’s a social phenomenon of sorts that so many individuals are turning to startups, social ventures and causes they are passionate about to invest their savings and/or disposable income in. Some crowd-funding campaigns are truly astounding in terms of amounts raised (up to a few million!) or the speed of the raise (my friend Hannah has recently raised close to £20k in a space of a few days).
There are already quite a few crowd funding platforms operating in the UK. We normally refer businesses to Crowdcube because of their track record (over £20m raised for 100+ businesses in 3 years) and reputation on the scene.
It’s worth stating that crowd funding usually isn’t equity free. Still, raising funding from a lot of small investors is so much less likely to lead to the loss of control over the vision and/or strategy of your company, than e.g. raising finance from VCs.
7. Bridging loans – little stash of extra cash
If your business is already operational but you need a small cash injection urgently, or happen to be in between funding rounds, consider bridging loans. We’ve seen quite a few people on the scene with this problem, and in response to it we’ve put together the Power-up Fund (full media launch soon!) which allows us to cash advance clients’ grant allowances and tax credit claims. If you aren’t eligible for tax credits or haven’t recently won a grant, there are other forms of bridging loans available though.
8. Growth Accelerator – tap into external wisdom to grow faster
For those keen to invest in leadership and development of your key staff (yourself included!) I couldn’t recommend more getting your company on the Growth Accelerator programme administered by Grant Thornton. As GrantTree we’ve found this funding to be incredibly useful. We’ve been able to secure a few thousands of pounds of match funding towards the strategic coaching services of our advisor Deri who has had a great impact on the growth of our business. If you are using a strategy coach already, you may be able to get their services match funded by the government if they get on board of the programme as a delivery partner.
Alongside Growth Accelerator operates Access to Finance, an advisory and entrepreneur – funder match making service for those needing extra guidance in their fundraising efforts.
9. UKTI – support for the expansive
UK Trade & Investment as a funding body is specifically relevant to business owners – in any sector – who are looking to expand internationally. Be it international market research or help with setting up a new office abroad, there quite a lot of incentives available to help you take your business to the next level. A good example is Passport to Export.
10. Regional grants – location matters
If you have the freedom to locate your business anywhere in the UK, you should be aware that in some regions of the country there is more grant funding available due to overall economic disadvantages. As an example, there are lots of regional grants (some of which can match fund your office rent and payroll costs) available in Scotland and Wales. To research this further I recommend that you check out the Business Finance Support Finder, a comprehensive database of UK grants and subsidies which allows you to search e.g. by location, by sector, and by the size of your business.
If you expect considerable profits soon and have the flexibility to base the company out of a more remote location like the Isle of Man – and employ at least one person there – think about it. Even if you don’t take advantage of any grants, being able to not pay a penny of corporation tax (IoM is a tax haven) will mean your business can grow faster.
11. How to write an exceptional grant application
Writing successful grant applications is an art in itself, and a vast subject worth another article. If I was to distill our grant writing knowledge to a few highlights, however, here are the ones likely to end up on top of the list:
– Be engaging. Construct a narrative that’s interesting and easily understood.
– Be proud of your project while being reasonable about it.
– Be precise. Research how your application will be assessed and include all the information asked for to earn maximum points.
– Be truthful. Nothing puts an assessor off more than a claim that can’t be substantiated or a project that keeps shifting perspective to try and make a point that doesn’t stand up to scrutiny.
– Be open and honest about project risks, competition etc. It always boosts credibility.
– Put in the hours (and the sweat!) to construct a great application. Write several drafts and get them read by your peers as well as people outside of your area of expertise. For example, a typical Smart Grant application (from the TSB) takes about a week to a week and a half of effort to write, and this is best to spread over a period of a few weeks so you can take breaks to (re)think things through.
– Think BIG. If your project was super successful, what change would you be able to achieve ten years on? Draw a convincing picture of industry advancement and brighter social and economic future as a result of your idea being fully implemented.
12. Stay in touch and learn more
You are very welcome to join our Friends & Partners mailing list so we can keep you on top of new grants and funding schemes becoming available to small businesses.
Above all though, GOOD LUCK with starting and growing your businesses. The future of the economy belongs to us.