Originally published on Forbes.com
Grant Finance For Tech-Led SMEs – It’s Not Just About The Money
“The availability of grant funding – both from the Technology Strategy Board in the UK and from the European Union – is the best it’s been for twenty years.”
That’s the view of Jerry Walker, CEO of the UK biotechnology company, Intelligent Fingerprinting. Founded in 2007, the company has its origins in research carried out at the University of East Anglia. Led by Doctor David Russell – now a board member – the research demonstrated that traces of substances found in a range of narcotics can be detected in fingerprints. With the technology now tested through prototype and pilot stages, the company is set to launch a commercially available handheld drug-testing device in 2015. In 2012, the company raised £2.0m from US investors to fund product development and subsequently secured a further £750,000. Grant funding has also been an important component in the overall finance mix, adding a further £700,000. To date, the company has secured two grants from the UK Technology Strategy Board (TSB) and has been offered funding from the European Union’s Eureka Eurostars programme.
And as Walker sees it, it is playing a vital role in helping science-led companies take their IP on the often torturous road from the lab to the marketplace. He cites the role of the UK’s Technology Strategy Board in particular.
“The TSB is not only a source of grant funding and peer review but also acts as an academy for SMEs. It is doing exactly what the UK SME sector needs – driving economic growth and creating jobs by supporting fast-growing businesses.”
Building a Better Business
But the process of securing grant funding can be daunting for small firms. For one thing, the application process is famed for its rigour and will almost certainly divert management’s attention from aspects of running the business. In addition, most public grants are awarded on a matching-funds basis, meaning that the company must not only spend time and energy winning the award itself but must also go out into the market to win funding from investors.
Daunting, yes, but according to Walker, the process of applying for and (hopefully) securing grant funding can be hugely beneficial to the business in question.
“One of the key benefits is that it makes you focus on your business plan,” he says. “And one of the things you learn is that if you can’t sum up your business plan in three of four sentences then your business model is too complicated.”
Equally, the grant application process sometimes places necessary pressure on businesses to demonstrate a genuine USP. “If you don’t have a USP, you’re unlikely to get the grant.”
The result is a complex interaction between the company itself – as it defines its potential and its position in the marketplace, the body that awards grants, and the investors who will be required to provide the matching funds. And in Walker’s experience, applying for and winning a grant subjects a business to a kind of rigorous review process that is part and parcel of proving the concept. This, in turn, is attractive to investors who are more likely to commit funds to a project that has received a degree of validation.
“In my experience, funding by the TSB has helped us to attract two to three times that amount from private investors,” he says.
For Intelligent Fingerprinting, grant funding also provides a means to address new markets. When the company’s first testing kit is launched, the focus will be on drug testing, with a customer base that includes police forces, the criminal justice system, and companies conducting staff drug tests for private-sector clients. It is, says Walker, a $2.6bn global market. However, the same technology can also be used for healthcare diagnostics, and Intelligent Fingerprinting aims to use Eureka Eurostars funding to develop that side of the business by participating in an Anglo-Finnish drug rehabilitation trial.
