Over the last few weeks, there has been a lot of excitement, information and disinformation going back and forth about the Technology Strategy Board (aka TSB), thanks to the launch of several exciting new grant schemes (some of which were transferred from the Regional Development Agencies which are now being shut down).
For obvious reasons, we’ve been quite keen to figure out what was going on, so we’ve spent a fair bit talking to both our clients and to the TSB. Here’s a summary of how we see things, so far.
First of all, one bit of confusion was caused by the fact that TSB launched two relatively similar grant schemes at the same time. The Tech City Launchpad 1 pilot was launched on Monday last week at an event hosted by TechHub. Another grant, the “Grant for R&D (single business)” became active on the same day, without the same press coverage. Let’s take them one by one.
Tech City Launchpad 1
The first thing to mention about the Launchpad grant is that it’s a pilot. TSB is trying to innovate on the way they fund startups, and they’ve taken in the feedback that most of their grants only apply to funded companies who already have investment. Since they also want to help smaller startups (the ones which might turn into Google or Facebook tomorrow..), TSB have designed this grant scheme to solve several issues:
- The application process is much lighter than the typical TSB process (a 2-minute video on YouTube, as opposed to a multi-page grant application).
- The grant results in a promissory note for 50% match funding that can be used to help raise match funding, rather than requiring money to have already been raised. This means that prospective startups can get the grant, and then use it to look for funding, rather than needing to obtain funding first.
These are both very good things for small, very early stage startups. Having that promissory note won’t mean that you necessarily can raise money from angel investors, but it certainly will make it easier (if only by halving the amount that you need to raise). If you’re a very early stage startup, you should definitely submit a video. You might get a nice surprise a month later. The deadline for this May 26th.
Going back to the key point, this is a pilot. TSB is trying new things. If this works, we will probably see more of these types of grants coming out. And they are willing to adapt to feedback: on the launch day, at TechHub, it became very clear from the audience questions that the “collaboration requirement” of the grant (which implied that applicants had to involve other business parties in their project) was poorly thought out, and rendered the grant useless. Only a few days later, the collaboration requirement was dropped. So, do provide feedback to TSB, and they will probably listen.
Grants for R&D (single business)
The other grant that was announced is a relatively new thing for TSB: an ongoing grant that is open throughout the year. In addition, it is not just one, but three separate grants:
- Proof of Market (up to £25k, 60% matched)
- Proof of Concept (up to £100k, 60% matched)
- Development of Prototype (up to £250k, 45% matched for small companies)
The exact use of each of those is a little bit unclear. Proof of Market appears to be for market research, competitive analysis, and so on. Proof of Concept seems, from our conversations, to apply to particularly hard technology developments that are not clearly technically feasible. Development of Prototype appears to be the most useful of the three, but it is not very clear about what the boundary between a prototype and a commercial product might be.
Luckily, we have spoken to TSB and clarified some of these points. In particular, we can say with some certainty that the Development of Prototype grant is the one most applicable to typical web startups. Whilst the grant was designed with more traditional products in mind (the kind of products which have clearly separated development and production phases), TSB understands that web startups will need to sell their product as part of the product development, and that making a few sales does not mean that the product development is somehow finished. As far as we can tell, the point where the grant becomes inapplicable is when you become profitable. If your product is developed enough that your revenues start scaling up rapidly, it’s time to opt out of the grant – but you can do that any time after receiving the grant.
TSB is far from perfect, but those two grants are both going in a very positive direction. And yet, many reactions were negative. We’ve covered this in much more detail in this blog post on TechCrunch.
It’s worth adding that we’re meeting some people from TSB near the end of the month, so if you have any questions, feedback, comments, and so on, please do let us know in the comments below or by contacting us.
Alternatively, if you simply would like to have a chat to find out if we can help you sort out which grant to apply for, do get in touch.
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