This blog is for CFOs and FDs working for innovation-led businesses. R&D grant funding is either embedded as a regular source of funding or on your radar as an opportunity for debt-free and non-dilutive cash for those expensive R&D projects. We are in regular contact with CFOs and FDs during the preparation of R&D grant applications and during the management of live grant-funded projects. Here are the 7 questions you should be asking your leadership team and your grant writer.
1: Understanding the Scope of an R&D Grant
Is this a UK grant or a European Grant? Local Fund, national fund or international fund?
Get a feel for the level of complexity and competition for the grant funding your team is interested in. Local and national grant funds are (generally) more straightforward with defined timelines. European R&D grants offer bigger rewards and require more preparation and patience, plus they are often collaborative in nature.
2: Timeframes involved with R&D Grants
Is there an EOI (Expression Of Interest) phase or is it straight to the main application? When is the deadline? When do we get a decision? How long before the project can start? When can we draw down funding?
Some grants can be written in 4 weeks, with an 8-week decision time, 4-week DD and then funding can be drawn down at the end of month 4 of the project (total of 30 weeks from start to cash-in-bank). Other grants have multiple phases and can take up to 52 weeks from start to first drawdown.
3: Money Available from R&D Grants
How much grant funding can we apply for? What’s the match funding rate?
The grant will cover a % of the total project cost, typically between 50% and 100% depending on your company size and the specific grant call. The remaining % is match funding that you will have to find. Match funding can be cash reserves, debt, new investment, or R&D budget.
4: Financial Aspects of an R&D Grant Application
From a financial perspective, what does the team need from me for the application stage? What does the funder need to see at the DD phase if we are successful?
It is likely you will need to prepare:
- Project Budget: The team will need numbers (wages, software costs, capital costs, etc)
- Forecasts: Funders will likely want to see some level of financial forecasts to varying levels of detail. There might be a specific spreadsheet to complete (usually a template from the funder – these can require a little patience). Funders will also want to know about growth in job numbers. Generally, your existing 3-5year headline forecasts will be enough.
- Match Funding: At the DD stage, funders will need bank details and evidence you have the required match funding in place. Normally having enough money to cashflow the first 4months of the project is sufficient.
5: Financial Management of an R&D Grant-Funded Project
What financial reporting will the funder need when the project is live? How often do we need to report and make financial claims?
Typically, reporting periods are quarterly. Evidence of spend, invoices, payslips and timesheets will need to be collated. Some funders require an independent audit from an accountant in the first and last quarters of a live project.
6: Leveraging the Impact of an R&D Grant
Can we include budget for:
- Project Management
- Financial Management (even if it a small % of your time)
- IP advice or Patenting
- Market Research
- Covering the cost of the Independent Audit Report
R&D grant funding is some of the most attractive funding you can get, so include some budget for subsidised admin and project management support to free you up.
7: Using a Grant Writer for R&D Grants
Are we using a grant writer? What is their fee structure? When will they need to be paid?
All good grant writers will have room for negotiating fees, if for example you commit to engaging them for multiple grant writing projects (not just a one off). Perhaps there is some wriggle room around payment milestones that would help cashflow – success fees can be hefty with some grant writers.
Summing Up
R&D grants are debt-free, non-dilutive and stackable. There are plenty of upsides, now hopefully we have helped you mitigate the potential downsides. We offer grant writing and grant project management services for UK and EU R&D grants. Please get in touch if you would like to discuss an R&D project or grant funding opportunity.
Alex Chalkley
I have over 20 years experience in founding and scaling businesses, mainly focused on the non-dilutive funding sector. Since 2008, I have built, trained and mentored teams to successfully draw down over €100m in non-dilutive funding from the UK and EU for clients spanning multiple sectors.
Get in touch
