Today, the smartphone in your pocket is capable of more than the most advanced supercomputer available 25 years ago. In the past couple of decades, we have seen technology push boundaries further than we could ever have imagined, but more recently, this trend has exploded – innovative tech is growing at an exponential rate.
What the next 50 years hold is anyone’s guess, but what we do know is that, right now, there is no shortage of funding sources for businesses developing innovative tech solutions, or even an entrepreneur with a great idea.
Here, we look at some of the tech funding available.
Government initiatives
Every world government is eager to be the first to announce a technological breakthrough, so it’s not surprising that the UK has launched a number of initiatives for those developing breakthrough technologies.
The primary source of government funding here is Innovate UK, part of UK Research and Innovation. Four types of grants are available:
- Catalysts aimed at increasing the pace of innovation in a specific sector, primarily agri-tech, biomedical sciences and energy.
- An investment accelerator, offering a combination of non-dilutive funding and equity investment from a pre-allocated investor pool. This is aimed at specific sectors. Recent fundings include digital health, Virtual Reality and Insurtech.
- Small Business Research Initiative (SBRIs) are government 100% contract-specific grants for work in areas such as waste reduction and cybersecurity.
- The newest type of funding from Innovate UK are Smart Grants. Launched in October 2022, UK registered organisations can apply for a share of up to £25 million for game-changing, commercially viable R&D innovation that can benefit the UK economy.
It’s worth noting here that companies that receive UK government funding tend to well-regarded by VCs who often see this as a stamp of approval for a good investment.
Public and private funding
GrantsOnline remains one of the best sources of regular, up-to-date information for both public and private innovative tech funding. In September 2022, the site advertised applications for a new £4.34m prize for technological innovations that can help the lives of those living with dementia.
The European Space Agency (ESA) often has funding opportunities for UK start-ups to support the agency in its efforts. A £15m fund was made available in October 2022 for companies working on satellite communication technology.
Horizon UK is a source of EU funding for UK SMEs working in high tech that want to work with other businesses in Europe and worth bookmarking for the latest opportunities.
As of June 2022, UK tech companies have raised more venture capital funding in the year to date than in all of 2020 with more than 950 start-ups and scale-ups securing £12.4bn, putting the UK second only to the US – and ahead of China, France and India. Here, the focus is on sectors such as fintech, SaaS, health, industrial tech, marketplaces and impact tech.
London-based Fuel Ventures is one VC looking for early stage companies in these areas, while another UK VC, Accel has its focus on cloud security, embedded finance and Web3. US investors are also putting increasing sums of money in UK innovative tech. Index Ventures recently announced a $300m seed fund for ‘extraordinary entrepreneurs’; while Octopus Ventures has pre-seed funding available for companies in health, deep tech and B2B software.
Alternative sources of funding
For entrepreneurs and smaller tech firms, crowdfunding remains attractive. Platforms such as Kickstarter and Indiegogo are popular in the UK for tech companies – as long as you can guarantee a market (and sales) for the product. Alternatively, Seedrs and Crowdcube seek funding from investors, rather than customers, in return for offering equity in the firm.
P2P (Peer to peer) business loans are similar to crowdfunding, but obviously these are borrowings that must be paid back. Funding Circle is the most obvious example here. The company connects small businesses with investors and supplies unsecured business loans of up to £500,000.
Secure the right funding opportunities for your organisation
Depending on where you are in your firm’s lifecycle and the niche in which you operate, there are numerous options out there. The type of investor you want to attract will be astute and experienced. To ensure your interests and your business are protected you need an experienced team advising you so the final terms are both fair and workable in the long term. We have supported numerous startup and scaleup businesses through the legal aspects of their funding rounds and we offer an initial free consultation to discuss the legal issues you are likely to face.
For more information visit: Funding Round Legal Advice
