Applying for the Innovate UK Smart Grant
My Experience and Lessons Learnt
Setting the Scene
In the Summer of 2020, my friend and I had a go at starting a company as a General Partnership having just graduated from university and being stuck at home due to COVID-19. We decided to call ourselves “Deep Hydrogen”, with the goal of using AI to reduce the intensive R&D costs associated with hydrogen fuel cell design and control. With prominent fuel cell companies like Plug Power at the time seeing their market cap balloon 14x in 6 months, the future looked bright!! We came up with the product specification, drew up architecture plans for how everything would fit together, and even applied for trademarks (which, by the way, are actually kind of expensive 😭). But we got ahead of ourselves. Turns out, stuff costs money, and we didn’t really have any.
Fortunately, I had briefly worked as a Research Scientist at a startup earlier where I helped them apply for government funding through the Innovate UK Smart Grant. This seemed to go relatively well for them, so bright-eyed and bushy-tailed, we decided to apply, what could go wrong…right?
What is the Smart Grant?
Well first, you can find more about this and other sources of government funding here. Essentially, it is a grant provided to support a business project worth between £25k and £2 million depending on the length of the project. There’s a focus here on innovation, the project idea has to be disruptive, otherwise, the application won’t even be judged if it’s deemed out of scope. This seemed perfect since it was also clear the funding was targetting ideas that had not yet been tested, so the fact that we didn’t have an MVP yet didn’t seem to be as much of an issue as it would be for private sector funding.
At this point you might be thinking, “this all sounds great, it’s basically free money 🤑”, and we did too! Well, unfortunately, there’s a big gotcha. Yes, the grant means that you don’t need to trade any ownership stake in the company, but the payments don’t come upfront. Instead, the government simply refunds you 70% of your business expenses once they’ve already been paid. So for example, if you applied for that limit of £2 million, you’d better have £2.86 million lying around to spend. Still, covering 70% of the costs massively reduces the barrier to entry for any new business, and it was more than good enough for us!
Applying for Funding
So, you have your billion-dollar idea, and you’ve committed to pursuing government funding with a better understanding of the terms. Now, how exactly do you apply? Well, there’s 10 main questions on the project and 3 questions introducing the idea to make sure it’s in scope for funding. Each question has a word limit of 400 words, and a few of them let you add a maximum of a 2-page appendix. In total, we ended up writing a 7500 word application!! You might be thinking this sounds like a lot, but actually we found the main issue was not going over the limitations and trying to be as information dense with our responses as possible. The skill here is definitely knowing what to include and what to leave out. The website has a whole section devoted to what you’ll need to answer, so I won’t go into it here, but I will say that the questions are diverse and pretty comprehensive, generally covering the technical idea itself, business management and benefits to society. Generally, it’s considered that the business management sections are actually the most important, even if the technical idea isn’t too hot.
One good thing about this process is it forced us to do more research and get a much better understanding of both the existing market and some of the technical aspects we had been avoiding till then (like how actually do hydrogen fuel cells work 😅). By the time we were ready to submit, I remember feeling fairly confident, even quoting us a 40% chance of getting accepted! But then I stumbled onto some stats associated with the Smart Grant. Turns out that in April 2019, only 8.45% of applications had been accepted, and we basically needed a score of 80% to stand a chance.
The Results
They really like to make you wait, there was around a 2-month period between the deadline for submission and the application notification. Given the stats from the previous section and my relentless hinting throughout the article, I’m sure it’s not surprise that we completely bombed it. Remember when I mentioned the threshold was around 80%? Well we came through with 53.8%. I’ll share the overall feedback below:
To Assessor 5, I can only say you’re a friend for life 🤝. The general feedback appears to be that the technical idea was decent, but we don’t really know much about hydrogen fuel cell research or the market, which makes sense considering we basically came up with the idea from thin air. If we could have quantitatively defined the problem and had proof of consumer demand, perhaps the decision would have gone the other way; although these things are easier said than done.
My main takeaway from this experience is that it’s very difficult to attract funding for an idea in an area you don’t have much experience in, unless you already have a proof of concept and support. In the future, I’ll be trying to concentrate more on areas in which I already have some expertise to give more confidence to whatever problem I want to address.
