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Small Business
Life support needed for future winners
Grants can make the crucial difference to start-ups with great ideas but no money
Kiki Loizou
17 Apr 2016 00:01:00
Rebecca Weir is delighted with how quickly her company has grown. In just five years, Oxford-based Isansys
has developed a lifesaving heart monitor and secured contracts with two Birmingham hospitals. Deals are
lined up with healthcare professionals in Germany and the company is already employing 15 staff here and is
hiring workers in India, where it next aims to take its business.
The secret of her success? Government grants. In their early days, Weir and co-founder Keith Errey won
£1.3m from the agency Innovate UK, which supports high-tech ventures through competitions and grant
funding. They used the money for research and development.
Today the Lifetouch sensor, a small bandage-like strip that wirelessly transmits a patient’s heart signals, can
help doctors detect early signs of problems. “For a small company like ours it was a lot of money. We took the
business to a place we could not have got to alone,” said Weir, 35. “We needed it to keep us going.”
Like many entrepreneurs who have received free cash from the state organisation, Weir is quick to champion
Innovate UK as a lifeline for companies that might otherwise struggle to get off the ground. Her praise
appears warranted.
Since 2007, Innovate UK says it has invested £1.8bn in innovation and returned up to £13.1bn to the
economy. It claims to have helped more than 7,000 ventures and created about 55,000 jobs. According to
Weir, it also helps to open doors. “The fact we had interest from Innovate UK has meant interest has come
from others.”
But changes are afoot. Innovate UK recently announced it would be converting one third of its £560m annual
budget into non-grant funding, leaving many to believe that a portion of the funds set aside for hand-outs will
be turned into loans.
Its infamous “Smart” competitions, which hand out between £25,000 and £250,000 for research and
development, are set to take a different form as the agency looks to shake-up how it awards its money.
The government also said it would be looking to merge it with the state-backed research councils.
Entrepreneurs and business groups are now wondering what the future looks like for Innovate UK; Britain’s
research spending is already the lowest among G8 countries and some fear this is the beginning of an
uncertain future for the country’s innovators.
“With productivity plummeting, it’s more important than ever to support innovation to help Britain maintain
its place as a world-leading research base,” said Laura Smith, head of manufacturing at the Confederation of
British Industry (CBI).
“As Innovate UK is a business-led, business-facing organisation with a mission to support innovation, it
should be recognised and funded independently of the research councils, which are fundamentally concerned
with supporting academic research.” Smith said the CBI was worried that changes would “undermine the
progress made in recent years”.
But Innovate UK’s chief executive, Ruth McKernan, insists there is nothing to worry about. “Our delivery
plan for this year is all about grant funding,” she said.
McKernan claimed that new changes were set to make it simpler for applicants to put themselves forward.
“There will be 10 competitions a year, two for each sector and two open for anyone with a brilliant idea. We
have simplified what we do so there is no constraint.”
She added: “We are doing a lot of work to understand the best way to introduce new finance products,
whether they are loans, equity or royalties.”
Offering loans instead of grants is an “absolute scandal”, according to Rufus Meakin, business development
associate at MSC R&D, which helps companies win grant funding for early-stage development. “You wonder
what sort of companies would apply. They’ll be companies that the banks don’t want to help,” he said.
Grants are in very high demand, added Meakin. “The coming year will continue with a system where 1 in 12
applications for a grant is approved, and that’s rubbish.”
The potential changes could stop entrepreneurs such as American-born Matt Johnson turning to Innovate
UK for support. In 2010 he won an Innovate UK competition and was awarded £100,000 for Bare
Conductive, which has developed a paint that conducts electricity.
The project began while Johnson and his co-founders Bibi Nelson, Isabel Lizardi and Becky Pilditch were
students at the Royal College of Art. Today, their paint can be used to trigger a light switch or activate
sounds.
“That money took us from having nothing in the bank to having a product for sale, which is the largest leap
our company will ever make,” said Johnson, 33, who has 10 staff at headquarters near London’s Spitalfields,
on the fringe of the City.
“Considering we weren’t making any money, it would have taken us a while to pay it back if it was a loan,” he
said.
Would he have still applied to take part in the competition? “It depends on the term of the loan. I think
applying for competitions as a small business at a certain stage is really useful because it helps you to
articulate what you want to achieve,” said Johnson.
He claimed to know many entrepreneurs who had funded ideas through Innovate UK’s grants and who now
sit at the helm of growing companies.He hopes the government does not scrap the offerings.
“People ask me why I came here to start a business, but that’s not why I came. I moved to Britain to study
and when we had an idea, we saw the government was incredibly progressive about helping small businesses
to grow, so we gave it a shot.”
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Published Date: 17 Apr 2016 00:01:00
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