David Cameron's recent announcement that £45 million of public money will be made available to technology companies working in the Internet of Things (IoT) space shows how seriously the UK government believes that the internet of things could be the start of a "second industrial revolution". In fact, this announcement brings available funding up to £73 million. As well as the economic benefits of a fast-growing industry, many IoT deployments would address societal or political challenges and will be heavily dependent on public sector support and implementation (think smart cities, smart metering, driverless cars).
Companies looking at Internet of Things technologies or applications should seriously consider applying to take advantage of this funding, and not just relying on private money to drive their business forwards. Whilst a lot of initiatives are known to be technically possible, business cases and commercial sustainability is often less clear cut. Applying for funding can be a good way to sharpen your pitch and secure investment without giving up control or equity.
What funding is available?
There are many different sources of funds available and we have not sought to detail them all. However, some of the key areas of funding for the Internet of Things are:
Technology Strategy Board provides a range of opportunities, from small proof-of-concept and feasibility studies through to large, multi-partner collaborative research and development and demonstration projects. They are normally allocated through competitive processes, such as:
- Collaborative R&D – partnerships between businesses or businesses and academia designed to tackle specific challenges through collaborative working.
- Feasibility Studies – lower level funding to test feasibility of a new idea (often a precursor to further funding).
- Smart – this fund is continuously open for applications for R&D schemes from small or medium sized enterprises.
- Demonstrators – large scale testing of new products and services in the real world.
- Launchpads – TSB supports funding in growing existing clusters of businesses, though does not itself create the clusters.
The actual subject matter of these competitions, and precisely which competitions are open at any time, varies. You can view the current competitions here.
Catapults are technology and innovation centres overseen by the TSB. There are various different catapults focussing on various areas of innovation, with the Connected Digital Economy, Future Cities, and Transport Systems catapults being closest to IoT development. They can provide funds to SMEs, as well as contacts within more established businesses and universitites.
Low Carbon Innovation Fund can provide between £25,000 and £750,000 to be invested in SMEs involved in low carbon technologies. Many IoT applications drive efficiencies and waste reductions which may qualify them for LCIF investment.
British Business Bank can also provide various types of funding through its Debt and Equity programmes, Start-Up Loans, Enterprise Capital Funds (ECFs), ECF Venture Capital Catalyst, Business Angel CoFund, UK Innovation Investment Fund and Aspire Fund.
What are the key issues in securing funding?
Time –innovative businesses in the IoT space, especially new companies, are already stretched when it comes to time. Finding the time to ascertain which funds are worth applying to, and then taking the time to run through the application process can be off-putting and prohibitive.
Suitability – it can be difficult to pinpoint which funds are most suitable for a particular SME. It can be incredibly frustrating to take the time and make the effort in applying for funding only to be turned away on grounds that the fund or competition in question is not quite suitable for that particular SME. Also, the converse can be true: a business may wrongly dismiss a particular funding source on the basis that it believes that t is not an appropriate candidate.
Eligibility – certain funds have requirements of additional investment. For instance the LCIF only invests alongside private co-investment, so public funding alone is not enough to secure investment.