Funding and finance options
We understand navigating funding options can be overwhelming. Here, Innovate UK Business Growth provides an overview of common solutions to help you get started.
We’ve divided the options into three types of funding and finance:
- Grants & Non-Equity Funding: Non-dilutive funding like government grants, Innovate UK programmes and innovation competitions which come with specific conditions, eligibility, and suitability criteria.
- Debt Financing: Loans which can provide capital without dilution of ownership.
- Equity Investment: Raising funds in exchange for equity in your business.
Your dedicated innovation and growth specialist can support you to assess your funding needs and recommend the most suitable financing strategy. This might involve leveraging a combination of these options for desired results. Please note: Whilst we do not write grant bids or administer awards directly, we can guide you through the process.
Financing your innovation journey: a guide for SMEs
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- Grant Funding for R&D: Non-repayable grants from Innovate UK to support specific innovation projects or themes.
- Contracts for Innovation (formerly SBRI): Innovate UK’s programme for businesses to win a government contract to develop and demonstrate solutions (grants with phased funding).
- Horizon Europe: The world’s largest Research and Innovation (R&I) programme that is open to all types of R&I organisations, including large businesses, SMEs, academia, public institutions, and third-sector organisations. Funding for Horizon Europe sits across three main pillars that have a diverse range of funding across early and growth stages. Our Horizon Europe Pump Priming programme supports UK based innovation-led businesses to explore and access Horizon Europe collaborative research and innovation opportunities.
- Start-up Loans: Government-backed personal loans for new businesses struggling to secure traditional finance.
- Angel Investors: Wealthy individuals offering investment capital, guidance, and mentorship in exchange for equity.
- Equity Crowdfunding: Raising capital from a large pool of online investors who receive shares in your company.
- Reward-Based Crowdfunding: Securing funding through online platforms by offering rewards (not equity) to investors.
- Venture Builders: Accelerators, often aligned to a venture capital business, that will take modest though increasing equity stakes in exchange for capital, mentorship and network access.
- Corporate Venturing Capital: Support and capital in exchange for equity and often exclusive use terms from corporate businesses in a similar sector.
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- Innovation Loans: Loans from Innovate UK for late-stage R&D projects with a clear path to commercialisation.
- Investor Partnership: Innovate UK Investor Partnership is a hybrid public/private, R&D project focused source of capital designed to facilitate often hard to fund moderate to higher risk activities. It aims to stimulate R&D in small to medium sized businesses, while accelerating equity investment into those companies so that they can grow more rapidly through innovation.
- Industrial Partnership Awards (IPAs): Grants offered by UKRI research councils (e.g., EPSRC, BBSRC) that support collaborative R&D projects between universities and businesses.
- Venture Capital: Investment from firms specialising in financing high-growth businesses in exchange for an equity stake.
- Peer-to-Peer Lending: Borrowing from individuals and institutions through online platforms as an alternative to bank loans.
- Term Loans: Lump sum loans with fixed interest rates for various business needs.
- Asset-Based Finance: Securing loans using business assets (inventory, receivables) as collateral, offering a flexible option for businesses with valuable assets but needing short-term cash flow.
- IP-Based Financing: Leverage intellectual property (IP) as collateral for loans or other financing arrangements, potentially unlocking additional capital.
- Revenue-Based Finance: Selling a portion of your future revenue stream to investors in exchange for upfront capital, ideal for businesses with predictable recurring revenue.
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- Private Equity: Investment from firms focused on established businesses with significant growth potential, often involving large sums and an equity stake.
- Asset Finance: Securing loans using business assets as collateral, suitable for businesses with valuable assets needing a cash injection.
- Export Capital: Financial instruments like bonds, guarantees, or loans to mitigate risks associated with exporting.
Carefully consider your business stage, funding needs, and risk tolerance when choosing the most suitable funding option.
For additional resources, visit our partner, the British Business Bank, for a comprehensive directory of finance options and local support services.
Related programmes
Contracts for Innovation
Enabling innovators to work directly with the public sector to develop new technologies and processes.
Horizon Europe
Horizon Europe is an opportunity for all types of UK organisations (including businesses and academia) to get funding for research and innovation.
Investor Partnerships Future Economy
A three-year initiative to boost Future Economy-focused SMEs through aligning grant funding for R&D development with investment from partnerships with credible investor partners.