Why Now is a Great Time to Be an SME

There is a general view that it is large industry that drives changes in our economy. While this is true to some extent, it is far from the whole picture. There are some surprising statistics when it comes to SME’s (2017 data from [1]) that you might not be aware of:

• Small businesses Mark blog pictureaccount for 99.3% of all private sector businesses and 99.9% are small or medium sized enterprises (i.e. less than 250 employees).
• Total employment in SMEs was 16.1 million. That represents 60% of all private sector employment in the UK.
• The combined annual turnover of SMEs was £1.9 trillion. That represents 51% of all private sector turnover in the UK.

You guys matter! In fact, as UK productivity continues to lag behind the G7 average [2], SMEs are cited by Government and other bodies as being critical to reducing this gap.

Innovation has a major role to play in contributing to SME growth and thus, UK productivity. Indeed, there is strong documented evidence [3] that SMEs who invest in research and development grow the most rapidly. Unfortunately, statistics show that SMEs have not been particularly successful in obtaining funding from UK sources. In fact, between 2007-2013, only 3.3% of UK Business Enterprise Research and Development was performed by SMEs [4].

There are numerous reasons why SMEs are reluctant or unable to apply for innovation funding, but common reasons include:

• Lack of resources (financial and people)
• Aversion to innovation due to economic risk
• Complexity of funding landscape and regulations
• Perceived market dominance by larger organisations

Curiously, SMEs are far more successful at drawing funds from EU funding instruments. Between 2007-2013, SMEs received approximately £658m in EU grants, which represents 65% of all funding given to UK businesses within that period [4]. Given that there is generally a greater perception of bureaucracy with EU funding, this is an interesting paradox.

While the EU has several SME-specific funding schemes, we suspect that the main reason for the higher level of SME success is the EU’s insistence on and support for SME inclusion in project consortia (and good for them). This means larger organisations typically act as coordinators and bear the brunt of the administrative burden allowing SMEs to reap the benefits of involvement in the research project.


The good news is with the recent release of its Industrial Strategy, the Government is committing to investing in the UK to ensure it will create real growth and prospects in the future. As part of this strategy there is clear support for SMEs. With all the uncertainties surrounding Britain’s formal exit from the European Union, now is a great time to get on board with the new Government initiatives for UK innovation and growth. If you don’t have a spare few hours to read this document, let us summarise some key points. UK Government is committing to the following:

• Investing £725m in new Industrial Strategy Challenges (see below).
• Launching and rolling-out Sector Deals – partnerships between government and industry.
• Increasing the rate of R&D tax credit to 12 percent.
• Reviewing additional ways to improve productivity and growth of SMEs.

As part of this strategy, the Government has set out four “Grand Challenges” to put the UK at the forefront of the industries of the future. These are:

• Artificial Intelligence and Data Economy
• Future of Mobility
• Clean Growth
• Ageing Society

Related to these Grand Challenges, the Government will announce specific Industry Strategy Challenge funds against which funding calls will be allocated. The current wave of Challenges includes:

• Audiences of the future (AI and Data Economy)
• Next generation services (AI and Data Economy)
• Transforming construction (Clean Growth)
• Prospering from the energy revolution (Clean Growth)
• Transforming food production (Clean Growth)
• Data to early diagnosis and precision medicine (Ageing Society)
• Healthy ageing (Ageing Society)

However, this is not the end. Expect further announcements and opportunities in areas such as:

• Advanced batteries
• Artificial intelligence and robotics
• Quantum technologies
• Future satellites
• Driverless vehicles
• Manufacturing and materials of the future

In an effort to simply things, the Government has made InnInnovate UK logoovate UK the central hub from which most funding calls will be announced. Innovate UK will periodically announce calls targeted at the areas stated above. Moreover, on top of these calls there are other schemes such as the Small Business Research Initiative, Knowledge Transfer Partnerships, and the Defence and Security Accelerator. There are also numerous initiatives to help universities connect with small businesses and aid technology transfer in to new products and services.

Finally, the impressive and rapidly growing network of Catapults that have been developed with the help of UK Government are designed to help transform innovation in to products and services by providing (amongst other things) technical expertise and scientific facilities.


Despite efforts to simplify the funding landscape, it is still fairly complex. It takes time to navigate through it and find the right funding instrument. Even if you’ve managed this part, applying for funding is neither trivial nor something for which you may possess the necessary experience (thereby taking more of your time to get up to speed).

As a small business ourselves, we know your time is precious and your resources are limited. Therefore, we are here to help you with all aspects of applying for innovation funding. Firstly, we’ll get to know you and your business and the technology for which you are seeking funding. Then we can look to find the right funding instrument and make sure you are clear on the various rules and requirements of the associated call. We’ll then provide a partial or full proposal writing service (depending on your needs).

We can also help manage the whole proposal process to ensure it isn’t a last-minute panic and goes as smoothly as possible. Finally, if your grant is successful we can provide project management and outreach services if that is something of interest.

We can’t guarantee success, but with our typical success rate of greater than 1-in-3, which is at least 4 times better than typical European averages, our support is designed to give you the best chance possible.

If you are interested in speaking to us about our SME innovation funding services, please Contact Us.


[1] Business population estimates, 2017: Department for Business Innovation and Skills.
[2] Journal of Business Venturing 26 (2011), 441–457, “Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs”, Rosenbusch et. al., 2011.
[3] Office for National Statistics, “International Comparisons of Productivity”, October 2017.
[4] Technopolis Group, “The role of EU Funding in UK Research and Innovation”, May 2017.

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