TSB Smart Grants: The right kind of project

Innovative

An important decision in the grant-writing process is what project to pitch for. This is something that catches out startups in particular (since they often blur the lines between project and company), but also larger SMEs.

So, what kind of project is “right” for TSB funding? What are they looking for, and what are they not looking for?

Project, not business

The first thing to highlight is that TSB fund technology development projects. They do not fund businesses. This means that if your project and your business are inseparable, you are at a disadvantage when it comes to TSB funding.

In theory, the idea scenario, the one that the application process is designed for, is that you are a relatively mature SME with a fair number of employees (let’s say 20-40) and you’re thinking of starting a project to develop an exciting technology. You’ve done the background research, you believe the opportunity is solid, but you have limited funds or are otherwise unable or unwilling to fund the whole thing yourself, because it is too risky.

In this scenario, the project is neatly separated from the company, and the business is mature enough to have processes in place to track that project as a separate entity with its own funding profile, resource allocation, budget, and so on.

This, then, is the ideal scenario from TSB’s point of view.

So what about startups? Well, startups tend to be in a situation where the project is the business. If the project succeeds, they may have a business, and if it fails, they almost certainly don’t. But there is still some separation to be made, a line to be drawn. Things that are not strictly part of the development of the technology (e.g. commercial work or other activities necessary to the success of the business but not directly supporting the R&D effort) should be separated from the project, so that we look at the project specifically, rather than the business as a whole.

Significant innovation

TSB is looking for the potential for significant innovation in the projects it funds. This means that the project can’t just be “we’re going to develop our product”. It must be a project to develop a specific technology that doesn’t exist or otherwise doesn’t work, rather than a project to develop your product.

As we say to many people: TSB funds technology projects, not businesses or products.

With software, this is a particularly important point. As discussed previously, software projects need to deliver “step change impact” – a tall order for any project.

The problem with this, for startups, is that most startup projects are, by necessity, not all that innovative – at least when measured against these criteria. After all, a startup already has the tall order of creating a new business from scratch. In that context, “technologically hard” projects are to be avoided, not sought out.

That said, it is still possible for some startups to qualify for TSB funding, if the startup is genuinely addressing a technically hard problem. Some startups are doing that (e.g. by developing a completely new piece of technology, like a hardware device or a piece of technology infrastructure) and if that’s genuinely part of their business, then it may make sense to apply for a Smart Grant.

What definitely does not make sense for a startup is to make up a risky project and pitch for that in order to get some TSB funding. If a startup does that, and they win, chances are the funding will cause more damage than good, because it will distract them from the already challenging task of actually getting the startup off the ground.

In summary

More mature SMEs should apply for projects which they’ve been considering doing anyway, but which seemed too technologically risky to be viable.

Early stage startups should only apply if their path to building a successful business involves developing a complex piece of technology.

If in doubt, of course, you can always give us a ring to discuss.

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