In fast moving technology sectors, companies are under continued pressure to raise funds to accelerate their R&D & Innovation programs as product life cycles and lead times shorten, whilst at the same time trying to protect capital growth and minimise costs.
However, total UK spend on R&D has stagnated since 2008 and remains below the OECD average. This is in part due to the common SME problems of - lack of management time, the lack of awareness of the funding options available and the time scales involved, and the lack of understanding how to formulate propositions that lenders will buy into - which results in sub-optimal funding decisions being made on an ad-hoc, short-term basis.
Not having the time to work ‘on’ the business rather than ‘in’, combined with a tendency to overestimate what R&D can be achieved in a year and underestimate what can be achieved over a five year period, means that businesses find it very difficult to effectively map out their R&D funding requirements. For example, R&D grants are a great potential source of ‘free’ R&D funding and can also act as leverage when looking for further funding. However, when you are typically working to 3/6 month time horizons, how do you take advantage of a grant funding programme that can have a 6-9 month led time?
According to HMRC statistics, some 45,000 SMEs claim R&D Tax Credits, receiving c£2.3bn relief on an estimated R&D spend of c£8bn. The ICT sector alone accounts for around 20% of this.
This means that almost £6bn of R&D expenditure is already having to be funded (and in many cases at a high cost) – and this figure needs to increase in order for the UK to regain its position as the place to innovate.
To do this, companies must start to take a longer term and realistic view of their R&D plans, quantify and map out their funding needs and gain a better understanding of the funding options available – in particular the likely lead times. Only by doing this will they be able to plan ahead with confidence.
MSC R&D has thirty years’ experience in helping tech businesses gain R&D funding – we can provide strategic insight, a knowledge of the R&D funding landscape and practical support in accessing R&D funding.
Why not contact us to discuss your R&D funding needs?
0114 230 8401