Innovate UK Insights

Innovation is part of the human experience, striving to do things better and faster, but it doesn’t belong just to individuals; it’s also for business. Unfortunately, there’s no definitive or winning formula so innovation in business, just like individuals, is trial and error, and success not guaranteed. Even when successful, the process often involves years of research and development, so why embark on this challenging path?

Aside from protecting themselves from obsoletion, the potential rewards for pioneering innovation can be substantial. Take Netflix, for instance; had they clung to their initial DVD delivery service, thriving in today’s landscape would have seemed improbable.

An introduction to Innovate UK

The UK government recognises the importance of research and development (R&D) and its important role in fostering economic growth. By targeting an R&D spend of 2.4% of GDP by 2027[1] equating to £39.8 billion they hope to position the UK as a scientific powerhouse. The government’s commitment to this goal is evident in the consistent year-on-year increase in R&D expenditure since 2018, totalling £7.8 billion between 2018 and 2021[2].

Operating within the framework of UK Research and Innovation (UKRI), Innovate UK serves as the government’s agency for research and innovation. It plays a pivotal role in realising R&D objectives by offering:

 

  • Funding – accelerating the innovation process within business and research organisations who, without the financial support, might be delayed or never develop novel products and services giving overseas competitors the edge.
  • Collaboration – facilitating networking among businesses and research organisations, fostering the exchange of ideas and expertise.
  • Support – providing valuable assistance through sharing best practices, market insights, and guidance on commercialisation.
  • Strategy – collaborating with government departments, research organizations, and industry groups to identify key areas and shape strategic initiatives.

While Innovate UK’s support extends to all businesses, there is a particular focus on start-ups, and small and medium-sized enterprises (SME). The expected outcomes of this support include:

  • Job creation
  • Increased competitiveness
  • Sector growth

Recurring themes in Innovate UK competitions are typically around net zero, health and wellbeing and next-generation digital technologies. Regardless of the grant or loan, the application process is extremely competitive with companies needing to prove their eligibility and the credibility of their ideas. Between 2020 and 2021, the award rate was to 14% of applicants[3].  Being a recipient is seen as a good indicator of future success supporting some of UK’s fastest growing companies at an early stage including Monzo and Improbable.

Previous Innovate UK Funding

Innovate UK have an extensive data archive, with a spreadsheet containing information on all projects since 2004 available easily accessible from their website[4].

Between 2011 and 2021, Innovate UK awarded 16,886 grants, which were awarded to approximately 7000 different private UK companies, totalling £9.8 billion. The biggest so far was a £27.1m grant received by Belfast-based Artemis Technology[5] to support the decarbonisation of maritime transportation.

The majority (65%) of Innovate UK grant recipients have been technology companies (4,310), many of which are involved in providing Software as a Service (SaaS). The second highest funded sector is business and professional services sector accounting for 2,677 grantees, while the industrial sector comes in third with 2,408.

Some examples of successful projects funded by Innovate UK include[6]:

  • £1.2 million to start-up Photocentric to develop a solution for digitally manufactured, 3D printed parts, made entirely autonomously to challenge existing injection moulding techniques to reduce material waste, energy consumption and carbon emissions from the manufacturing process.
  • £1.8 million to a collaborative project “Deep Meta” between University of Sheffield, Tata Steel, the University of Warwick and University of Cambridge to use artificial intelligence (AI) to reduce energy use and carbon emissions in the steel industry using machine learning and computer vision to optimise steel slab and coil production and to detect defects in real time.
  • £1.3 million to a project led by PragmatIC Semiconductor with Arm, Unilever, and University of Manchester to build a new high-volume manufacturing facility, embedding flexible integrated circuits into everyday objects to enable smart packaging and labels to communicate with consumers. The aim was to tackle pollution in the electronics industry.
  • £150,000 was awarded to NovNat Tech to develop a novel material able to extract water from the air in any environment regardless of the humidity using metal-organic framework (MOF) at low energy cost and can be used as sustainable source of clean drinking water.

Who do Innovate UK fund?

Location

Innovate UK grant recipients have predominantly been headquartered in the country’s southern regions so far. Notably, London has taken the lead with 1,636 recipients, followed by the South East (1,003), the South West (536) and the East of England (655). Both the North West and Scotland, however, also boast a substantial number of grantees, standing at 548 each. In contrast, Wales has had just 237 Innovate UK grant recipients, and the North East and Northern Ireland the fewest (184 and 171, respectively).

In alignment with the government’s commitment to the levelling up agenda, Innovate UK actively participates in the task force dedicated to addressing regional disparities. In 2022 the highest level of investment per number of businesses was in the North East, followed by the West Midlands so this could potentially signal a change but will be driven by where businesses set up.

Innovate UK have recognised the tendency of businesses to cluster in strategically advantageous locations, and have therefore taken a proactive stance, introducing “Launchpads”.

“Launchpads” aim to provide businesses, regardless of size, in these clusters access to varied support from innovation, financial or collaboration. Their goal is to enable the development of new products and services, facilitate the testing and validation of innovations, and stimulate local economies. It is hoped each Launchpad will act as a catalyst for world-leading innovation clusters, fostering economic growth across various parts of the UK.

In 2017, job creation emerged strongest in London, followed by the South East and North West. The turnover of grant-receiving firms was boosted most in Scotland (29%), Yorkshire (31%) and London (35%)[7]

Diversity

To date, 80% of businesses receiving Innovate UK grants have an all-male founding team. It is essential to note that this statistic is likely a reflection of the science and technology environment, rather than Innovate UK itself. According to a recent study by the Financial Times, over 90% of tech investments in Europe are directed towards all-male teams.[8]

In response to these disparities, Innovate UK has taken a proactive stance by introducing the “Inclusive Innovation Award.” This prestigious award aims to celebrate and support businesses that serve as role models in developing innovation with a strong focus on equality, diversity, and inclusion in both design and development processes[9]. Interestingly, what sets these trailblazing businesses apart is their commitment to diversity at all levels of leadership.

The recent award winners were:

  • 67% women
  • 38% Asian, black or other ethnic minority group
  • 52% had unpair care responsibilities.
  • 22% self-identified as disabled

While specific data on the overall ethnic diversity of companies funded by Innovate UK is not readily available, they reiterate their commitment to levelling the playing field and supporting innovators from groups currently underrepresented or overlooked in innovation.[10]

By fostering a culture of diversity and inclusion, Innovate UK strives to create an innovation ecosystem that truly reflects the rich tapestry of talent and ideas present in our society.

Is Innovate UK funding value for money?

Innovate UK operate with a budget that constitutes approximately 10% of the UK Research and Innovation’s (UKRI) funding and 0.04% of the total UK government expenditure. Given that this budget is funded by British taxpayers, it seems fair to ask “is it delivering value for money?” The answer, however, is not clear cut or definitive, and largely depends on the criteria used for assessment, as well as the availability of evidence. Different stakeholders will have different views and opinions.

Innovate UK claim an impressive £7 return for every £1 spent[11] but how this value was calculated is unclear. Financial returns, while significant, may not be the sole measure of success. The broader impact on the UK’s long-term economic growth, competitiveness, and societal well-being are equally crucial considerations.

Quantifying these impacts proves challenging due to various factors:

  • Time Lag: The time between investing in innovation and seeing tangible results can span years, if not decades. Patience is key as innovations mature and fully realise their potential.
  • Complexity of Assessment: Disentangling the impact of funding from other influencing factors is a complex task. Market demands, consumer demand and  competitor actions are difficult to predict, adding additional layers of intricacy.
  • Attribution Challenges: It is difficult to determine whether innovations owe their success solely to Innovate UK funding, or whether other factors have played a key role. Are the impacts of innovation a result of spill over from other sections, regions, or groups?
Value for money

One study[12] “Assessing the business performance effects of engagement with publicly funded science” meticulously scrutinised research and development grants over a 13-year period, totalling £8 billion. A number (but not all) of these grants originated from Innovate UK. The study yielded the below findings:

  • Employment grew by 6% in the short-term and 23% after six years.
  • Turnover grew by 6% short term and 28% longer term, gaining an estimated £43 billion between 2004 and 2017
  • Productivity grew by 6%
  • An estimated 150,000 new jobs were created, many in highly skilled sectors such as biotech, medical, engineering, and hi-tech manufacturing.

How do Innovate UK evaluate performance?

  • Surveys, Case Studies, and Analysis: Rigorous examination utilising surveys, case studies, econometric analysis, and counterfactual methods, to assess the performance and impact of funding programs and activities.
  • Key Performance Indicators (KPIs): Adoption of key performance indicators, including metrics such as the number of jobs created, turnover generated, and private investment leveraged.
  • Impact Reports: Utilisation of impact reports, such as those generated by the Enterprise Research Centre (ERC), to gauge the broader influence of Innovate UK initiatives.

It must be acknowledged that there is a high level of risk involved with innovation and not all funds awarded will lead to a successful outcome.

Conclusion

In summary, Innovate UK stands as a dynamic force in driving innovation across industries and regions. It grapples with challenges, adapts to shifting dynamics, and champions diversity and inclusion, aiming to foster a robust, inclusive, and forward-looking innovation ecosystem in the UK. Assessing value for money goes beyond immediate financial return and Innovate UK is committed to not only showcasing tangible outcomes but also contributing to the broader spectrum of societal and economic advancements. As different stakeholders may hold diverse perspectives, Innovate UK actively encourages dialogue and collaboration to collectively gauge the multifaceted impact of innovation.

 

How can TBAT Innovation help?

Our Grant Funding team is well-equipped to support businesses seeking Innovate UK Grant funding by providing a range of services tailored to optimise the application process. With our wealth of experience in navigating the intricate landscape of grant applications, we guide businesses through strategic planning aligned with grant objectives, meticulous application preparation, budget optimisation, score maximisation, and the integration of valuable feedback from past applications. Our proficiency in refining project focus, monitoring progress, and facilitating reporting positions businesses for successful funding acquisition.

If you are considering applying for a grant funding opportunity to help fund your project, reach out to us today. We are keen to discuss how we can contribute to the success of your business.

GET IN TOUCH WITH AN EXPERT

[1] www.gov.uk (accessed November 2023)

[2] Office for National Statistics (ONS), 17th July 2023, Statistical bulletin, Gross domestic expenditure on research and development, UK: 2021

[3] https://www.ukri.org/what-we-do/what-we-have-funded/innovate-uk (accessed November 2023)

[4] https://www.ukri.org/what-we-do/what-we-have-funded/innovate-uk (accessed November 2023)

[5] https://www.beauhurst.com/blog/biggest-innovate-uk-grants, accessed 20/10/2023)

[6] https://www.ukri.org/news/14-million-funding-for-sustainable-smart-factory-projects/ – accessed December 2023

[7] UK Deputy Chief Executive, Kevin Baughan ERC Annual State of Small Business Britain Conference, 2017 – ‘Driving Innovation and Growth’

[8] https://www.ft.com/content/34bdff48-f6cb-11e8-af46-2022a0b02a6c (accessed December 2023)

[9] https://iuk.ktn-uk.org/programme/inclusive-innovation/ (accessed December 2023)

[10] https://apply-for-innovation-funding.service.gov.uk/competition/1658/overview/99ab941a-e2e5-440e-92e0-054274d53c63, accessed December 2023

[11] https://www.ukri.org/publications/innovate-uk-strategic-delivery-plan/innovate-uk-strategic-delivery-plan-2022-to-2025/, accessed December 2023

[12] Enrico Vanino, Bettina Becker and Stephen Roper, ERC research paper 61, October 2018

Further Information

Get in touch with
Clare Fairfield E: info@tbat.co.uk