Innovate UK pilots £8.5m ‘blended’ funding

Early-stage UK tech companies are set to benefit from a new £8.5m blended funding programme from Innovate UK that combines grants with venture capital investment for the first time. Andrew Huddart reports.

Innovate UK’s ‘investment accelerator’ has been developed as a pilot programme with seven UK investor partners, alongside its own funding from BEIS. It is the first time that IUK has integrated an investment element alongside one of its grant schemes.

IUK says the aim of the programme is “to fund innovative high-risk projects and invest in companies that have real potential for growth”. For the pilot, only projects that fit into two broad sector domains –  infrastructure systems or health & life sciences – will qualify.

The government has put in £6m to the pilot pot, anticipating a further £2.5m in private investment. With individual projects expected to apply for up to £150,000, the pilot could support 60 projects. The £8.5m pot is roughly split in half between the two broad domains.

The seven investors in the investment accelerator are:

The competition criteria identifies sub-sectors, aligning with UK industry policy:


  • Smart infrastructure
  • Energy supply and systems
  • Connected transport
  • Urban living

Health & life sciences

  • Agrifood
  • Biosciences
  • Advanced therapies
  • Medical technology
  • Digital health

The programme offers a clear definition of what stage technologies need to be at to qualify for funding. They should be neither too early (pure R&D, for example), nor too close to market (product launch or post-launch evaluation).

Businesses applying for funding through the programme will be able to seek 100% funding for a novel tech project, applying for 60-70% of eligible costs as a conventional grant with the remaining 30-40% match funded through either equity investment or convertible loans through one of the listed investor partners.

The programme offers a major change from past Innovate UK grant schemes or competitions, in which applicants must find a share of their own funds to commit to a project. IUK expects the new approach to “give management teams more time to run the business rather than continually chasing investment”.

As well as assessment by InnovateUK, all applications will also be scrutinised by the private investors using their own criteria.

If the co-funding model succeeds, it could add a different capability to the government’s funding for science and industry, which is changing in 2017. A unified UK Research & Innovation (UKRI) body is being formed to encompass all activities around the £6bn invested each year into research and innovation of all kinds.

Innovate UK graphicInnovate UK will form part of UKRI along with the formerly separate research councils and the legacy body delivering block research and knowledge exchange funding for the university sector.

Closer integration with the patient capital sector – investors like those involved in this pilot – can only help science-intensive tech ventures to raise appropriate funding to remove science risk from commercial projects in years to come.

Businesses are invited to register for the investment accelerator before June 28 and submit full applications by July 5.

Full details of the competition, including precise project and applicant eligibility rules, deadlines and briefing information sessions can be found here.