Funding for developing innovative ideas

Investigating an Innovative Idea provides smaller grants for helping to get an idea off the ground

02 12 2004 United Kingdom

Most people view the government’s grant system as being complex and confusing - which it can be - so this article gives a simple overview of two important ones for small businesses:: Investigating an Innovative Idea; Research and Development

The grant for Investigating an Innovative Idea may lead on to a further grant for Research and Development. Note that both of these apply in England only. (Separate arrangements apply in other parts of the UK.)

Grant for Investigating an Innovative Idea

The aim of the Investigating an Innovative Idea (III) grant is to help businesses based in England with fewer than 250 employees* to develop their ideas by working with external experts. Applications are vetted by the Small Business Service of the Department of Trade and Industry.

* Eligible businesses must also have an annual turnover not exceeding 40m euro or an annual balance sheet total not exceeding 27m euro.

The intention is to enable small businesses to find out where special expertise will be needed and engage the help of experts in the critical early stages.
The outcome will be an action plan, which you can then use to take the idea forward to develop innovative products, processes or services.

The outcome could give a positive result or it might show that the idea is not viable, so saving significant potential costs in the longer term. The aim is to increase the likelihood of a successful commercial outcome for the business.

The grant will cover 75 per cent of the cost of using your mentor and consultant(s) up to a maximum of £12,000.

Grants will only be made at this level for the largest and most complex projects.
Most grants will be between £2,500 and £7,000 and these projects are usually completed in 3 to 6 months.

The applicant would meet the remaining cost of the consultant and is expected to contribute a significant amount of time as well, to ensure that the business and the consultant are working effectively together.

If traditional market research is part of the project, then the III grant can cover the costs of consultants who provide additional technology and marketing skills to the business. This might include investigating the competitive environment.

Grant for Research and Development

This grant is aimed at individuals planning to start up businesses in England and at small and medium-size enterprises (SMEs) already operating in England.

These discretionary awards are offered to help businesses carry out research and development work that will lead to technologically innovative products or processes.

R&D grants were previously known as SMART awards. They can cover 'market assessment' and product development, but not market research or market survey costs.

The DTI have announced that R&D grants will be awarded on a competitive basis, which means that fewer applications will be approved.

Grants are made in four categories, covering 35 to 70 per cent of the project costs – depending on the category, the number of employees and where in England the business is located.

There are also maximum limits for each category, e.g. –

£20,000 for a ‘micro-project’ to develop a prototype
Up to £500,000 for an ‘exceptional development project’.

The number of grants awarded is dictated by the government funding available and how many applications are received for each competition.

R&D grants are managed by the SBS as well. If you miss a deadline for application submission you could have to wait up to 90 days – or longer – for the next competitive round before you receive a decision from the SBS.

To sum it up

Investigating an Innovative Idea provides smaller grants for identifying the steps that need to be taken to get an idea off the ground. The timescale for approval is generally a matter of weeks rather than months.

The DTI’s III fund is enough for around 400 grants each year, across the whole of England but, at present, about 80 per cent of III applications do get approved.

The R&D grant puts larger sums of money into viable, innovative products and processes and the approval process takes longer. The competitive element means that the result depends on the strength of other bids at the time you apply.

You can find out more about these grants here on the DTI’s website:

Grant for Research and Development (page opens in a new window)

Grant for Investigating an Innovative Idea (page opens in a new window)

Getting help to get started

Before submitting an application for III funding you need to know

The scope of the intended project,
Who you want to engage as a consultant and
The likely cost.

The DTI have a ‘diagnostic tool’ to help you find out, with the assistance of a business adviser, the specific areas where you need the additional skill s and knowledge of a consultant.

Simon Read runs the National Business Innovation Centres and has extensive experience in obtaining government grants for clients, with useful contacts at the DTI.

You need to have a business adviser who is authorised by the DTI to help in the initial stage and Simon can arrange this for you. He can also provide help and advice in completing the application form.

You can contact Simon Read on 0845 226 1150
or at simon.read@simonread.com

Please mention that you saw this article on topenterprise.

National Business Innovation Centres (page opens in a new window)

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