Wondering how to secure the right funding for each phase of your innovation journey? This month, we caught up with Sean Gottschalk, Operations Manager at Ian Farley R&D Tax Credits, to learn about the various funding avenues businesses can tap into—from initial development through to full-scale commercialisation.
Q | Sean, what are some common funding options available right at the start of an innovation project?
At the very beginning, many companies turn to bootstrapping, using their own resources or personal funds, sometimes with help from friends or family. This approach is often enough to hit those early project milestones and show commitment to the idea. Some businesses also seek early equity investment, particularly when they’re facing high technical risks. Equity investment doesn’t just offer funding; it often comes with strategic support and expertise, which can be invaluable for areas where the business might need additional skills.
Q | Once a project is past the initial phase, what other funding options open up?
At this stage, grants are worth considering. Grants are particularly well-suited to early-stage innovation, as they focus on overcoming technical challenges and risks. The more groundbreaking and technically ambitious the project, the better the chances of securing a grant. However, with so many grants available, it can feel overwhelming, and submitting a strong application takes some skill. I’d suggest working with a professional to pinpoint the right grant and help put together a compelling application.
Q | As projects get closer to market, what types of funding do companies typically look for?
When a project is closer to being market-ready, commercial loans start to become more relevant. By now, the technology or product is often further along, and the company has a clearer market strategy. Banks and lenders are usually more comfortable providing loans at this stage, given that the risks are lower. If your business has regular income, loans can even be secured against things like sales invoices or intellectual property. For companies without standard revenue streams, some lenders offer flexibility by securing loans against intellectual property or even software assets.
Q | Can R&D tax credits help during this process?
Absolutely! R&D tax relief can be a valuable source of funding right through the development phase. When businesses work on innovative projects and tackle technical challenges, much of this work is likely to qualify for R&D tax credits. These credits allow companies to recover a portion of their R&D costs, which can help keep cash flow healthy and support ongoing development. For many companies, R&D tax relief is a key factor in sustaining long-term innovation projects.
Q | When it’s time to commercialise, what funding options should companies think about?
When you’re ready to bring a new product or technology to market, Patent Box relief is worth considering if you have a patentable invention. The Patent Box scheme reduces corporation tax on profits from patents registered with the UK or European Patent Offices, providing a tax break that supports future innovation. While it doesn’t fund current projects directly, Patent Box relief can offer additional funds that support ongoing and future R&D.
We hope you found Sean’s guidance useful. If you have questions about funding options for your innovation projects, feel free to contact Ian Farley R&D tax credits. One of our representatives will be happy to discuss your specific needs and show how we can support you.
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