Investor Partnerships: Investor Selection September 2024

We are seeking investor partners who want to invest in high growth potential micro, small and medium-sized enterprises (SMEs).

Your organisation must be an investor or be able to demonstrate that you can directly facilitate investment.

To be selected you must demonstrate that you:

• are a credible investor, or can facilitate investment, with a clear investment strategy aligned to the Innovate UK plan for action for the future economy and have the ability to generate returns and add value to your portfolio businesses beyond financial support
• have the capacity to invest in companies that are successful in their application to the investor partnerships programme
• either have the capacity to follow your investment or to encourage other investors to fund further rounds of investment as and when required
• have the capability to successfully transact investments and manage your portfolio
• are in a position to lead the investment

SMEs will be able to apply for grant funding for a proportion of their eligible project costs, aligned with your investment into the business, through a series of competition rounds.

The process for identifying and assessing SMEs is described in the competition brief for each round of the future economy investor partnership programme. In all cases it will require the SME to apply through our Innovation Funding Service to a specific competition.

The SME’s application will need to demonstrate that it falls within the scope of the future economy investor partnership programme, including within specific areas of focus where we have availability of funding in each round.

Innovate UK has allocated up to £80 million to fund innovation projects in the current Spending Review period, aligned with investment from investor partners. Funding has been offered through regular rounds of the SME competitions from July 2022 to summer 2024.

This competition does not provide funding to the applicant investor. It is our ambition to seek further funding in the next Spending Review to enable us to deliver programmes in the future.

Potential SME applicants will be able to apply for grant funding for:

• feasibility studies, which can have eligible project costs from £50,000 to £300,000, can last between 6 and 12 months and will have grants of up to 70%, with at least the same amount of aligned investment from or led by an investor partner
• industrial research projects, which can have eligible project costs from £100,000 to £1 million, can last between 6 and 15 months and will have grants of up to 70%, with at least the same amount of aligned investment from or led by an investor partner
• experimental development projects, which can have eligible project costs from £250,000 to £2 million, can last between 12 and 15 months and will have grants of up to 45% for micro and small businesses or up to 35% for medium sized businesses, with at least twice the amount of aligned investment from or led by an investor partner

The investment from the investor partner is separate to the cost of the project. For example, a £300k feasibility study could receive a £200k grant from Innovate UK, with the SME covering the remaining £100k, as long as the investor partner invested at least £200k in the SME as an aligned investment.

Investor partnerships are aimed at supporting SMEs that seek support for R&D projects through Innovate UK grant funding and that also seek aligned investment from investor partners.

To be an investor partner, you must demonstrate credibility, capability, capacity, commitment and alignment of interest to the scope of the investor partnerships future economy programme.

We are looking to support projects that focus on the future economy areas included in the Innovate UK plan for action.

The broad theme areas are:

• net zero
• health and wellbeing
• next generation digital technologies and technology families

Innovation and ideas can come from anyone and anywhere. We want to see investments unlocked for the diverse and extraordinary talent in the UK. We are encouraging diverse applicants and inclusive project applications, pushing beyond the status quo.

We encourage innovation involving communities that are typically under-represented, including:

• from regions that have historically accessed lower levels of investment (outside London, Oxford and Cambridge)
• ethnic minority groups
• women and other marginalised genders
• people with disabilities
• people with non-traditional education backgrounds

The funding within the Future Economy programme for the current Spending Review period is fully committed. Future programmes expect to cover a broad scope.

We have also delivered investor partnership programmes with other areas of focus as separate competitions. These have included the Create Growth programme from the Department for Culture, Media and Sport (DCMS) and the Farming Innovation programme from the Department for Environment, Food and Rural Affairs (Defra). If funding is made available, we may offer further programmes of a similar nature.

To learn more about Investor Selection visit the Application Briefing page where you can view the video and slides from the briefing event on 17 September 2024

If you would like to discuss your application, contact Innovate UK Business Connect’s Investment team.