Navigating the UK’s evolving grant landscape
The UK grant landscape has been in flux over the past year, largely due to a change in government and Labour’s new spending review.
Innovate UK, the UK’s innovation agency providing grant funding to organisations for novel products and services, has been impacted by this recent reconsideration of public R&D spending. The organisation is also undergoing ongoing leadership changes, which has affected the amount and flow of grant competitions.
In this article, we explore implications of changes to the grant support offered, before providing updated advice and opportunities to help those companies navigating the new system.
Smart Grants
As of January 2025, Innovate UK (IUK) has announced a pause in its Smart Grants programme as part of a wider review into how it funds and supports SMEs. This is a significant alteration to the UK grants landscape, as Smart Grants have long been an excellent source of R&D funding for innovative business, served on a rolling and sector-agnostic basis. Smart Grants offered between £15-£25 million each quarter for game-changing and commercially viable R&D innovations, so their removal (and uncertainty around their replacement), will mean many businesses face delays in their R&D timelines or be forced to halt projects altogether.
Why were Smart Grants pulled?
Over the past year, each Smart round has seen well over 1,500 applications moving forward to assessment. This extreme number of applications incurs multi-millions in assessor fees, meaning that the Smart grant assessment process challenges the economics of the scheme itself, negatively impacting return on investment.
The high number of applications also leads to incredibly low success rates for applicants. For example, during the final round (November 2024), the available funding pot was reduced from £25 million to £15 million, which will likely bring the success rate down to a historically low 2%. With each passing round of incredibly low success rates (and therefore thousands of wasted hours of preparation and writing work from applicants), the scheme has faced increased pushback. This has brought into question Smart’s effectiveness in supporting SMEs and facilitating the growth, and adoption of, UK-born innovation.
The impact of AI
The penultimate round of Smart saw 2,134 applications, with only 1,676 moving forward to assessment, meaning that over 20% of applications did not pass the eligibility/scope check. Of those that were assessed, only 3% were successful. We can partially attribute these statistics to the recent introduction of AI in grant applications and its associated removal of human understanding and ability in grant scoping and writing.
As is the case with most industries, AI can offer incredibly beneficial assistance for certain tasks. For example, when writing grants, we find it particularly useful for researching target markets and helping reduce word count. However, we’ve found that grant applications written using AI are often generic, utilising template-based responses which are void of nuance. AI often provides inaccurate or misinterpreted information, so should always be cross-checked manually. It also relies on the user knowing what a ‘good’ application looks like, which many first time applicants won’t.
Potential replacement scheme
We expect to hear more about the Smart Grant scheme’s replacement in Spring 2025. However, in the meantime we’re hearing that Innovate UK may be releasing more sector-specific competitions tailored to industry challenges such as the recent Farming Innovation Programme. We’re also expecting to see more regional grants, such as the three competitions which went live in February 2025.
If a permanent replacement scheme comes into place, we hope that Innovate UK will consider retaining the rolling application element which was unique to Smart Grants as this enables accessibility and flexibility for growing business at all readiness levels.
Application Advice
Industry Red Flags
Over recent months, we’ve experienced multiple instances of SMEs being fed inaccurate information by grant writing consultancies. One instance, is clients being told that IUK assesses grants as soon as they’re submitted, and therefore the sooner a client submits their application, the higher their chance of winning. This information is false, as all applications are reviewed after the deadline. Tactics like this are clearly being used to pressure clients into signing contracts before they’ve had a chance to explore all opportunities.
Many consultancies like this target a quantity over quality approach, charging very high upfront fees upon submission, or for access to in-house, AI-based grant writing tools. Once this fee has been paid, the support becomes more ‘hands-off’ and the consultant is off the hook as they are not awaiting any commission fees based on the application’s success. These consultancies can therefore churn out huge numbers of applications without being held accountable for the quality of their work.
Best Practice Principles
Providing an honest assessment on the chances of success: A consultant should let you know sooner rather than later if you don’t stand a high chance of success, proving that they don’t want to waste your money, or their time.
Upfront scoping and eligibility completed free of charge: A consultant should take the time to understand the proposed technology and project design before agreeing terms with a prospective client.
Fees weighted towards success: Upfront fees are not always a red flag. In fact, many reputable consultants do charge upfront so that they’re not working entirely at risk. However, you should opt for consultants who charge lower upfront fees, combined with a commission. You can also choose to work on a ‘no-win, no fee’ basis as offered by Sustainable Ventures. As a climate tech ecosystem for early-stage climate tech businesses, we understand that startups often struggle with cash flow constraints. We cater to the needs of our clients by offering a ‘no-win, no fee’ model, only taking commission on successful grant applications.
Transparency on success rates: Only employ consultants who share their success rates (and can prove it if you ask them to)! If a consultant has withheld their success rates from their website, it’s not a great sign.
Transparency around the amount of client input involved: Consultants should be immediately upfront about the input required from you. At SV, we provide a document detailing the level and type of involvement needed prior to agreeing terms with prospective clients.
Upcoming Grant Opportunities
At Sustainable Ventures, we’re constantly scanning the grants landscape to identify relevant grants for our clients. We’ve seen that the European Innovation Council has recently released two new Pathfinder Challenges grants which fit the themes and scopes of our ecosystem companies.
Biotech for Climate Resilient Crops and Plant-Based Biomanufacturing - to develop biotechnological solutions to enhance crop resilience to climate change and increase the nutritional value of crops.
Waste-to-Value Devices: Circular Production of Renewable Fuels, Chemicals, and Materials - to develop technologies that convert waste into valuable products, promoting the circular production of renewable fuels, chemicals, and materials.
The deadline for these competitions is 29th October, but we’re hoping to get a good head start. So, if you think you fit the scope and would like to discuss how SV can support you, then please get in touch!
