Funding competition Investor Partnerships: Investor Selection September 2024

Investors can apply to partner with Innovate UK to support innovative SMEs through investment and collaboration.

Competition opens: Monday 9 September 2024
Competition closes: Wednesday 20 November 2024 11:00am

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Description

Innovate UK is inviting investors to partner with us. Together we will support growth in UK micro, small and medium-sized enterprises (SMEs) through collaborative opportunities and investment.

Collaborative opportunities include:

connecting with businesses, investors, and experts through Innovate UK Business Connect and Innovate UK Business Growth across the UK
engaging with the wider Innovate UK and UKRI system
connecting with innovative businesses seeking investment through Innovate UK Investor Connect
supporting spin outs through the Innovation to Commercialisation for University Research (ICURe) programme
supporting investor portfolio and prospective companies through Innovation Loans

There is no Innovate UK funding awarded to applicant investors. The Investor Partnerships programme aligns Innovate UK’s grant funding for R&D projects alongside your investment.

We aim to create a broad “pool” of investor partners to invest in SMEs innovating at all stages of business growth alongside grant funding, following an application by the SME to subsequent SME rounds of one of our investor partnership programmes.

Grant funding will be awarded by Innovate UK to applicant companies (SMEs) to cover a proportion of eligible project costs, alongside aligned investment from or led by one or more investor partners.

Your investment will typically be in the form of equity but can include other forms of funding, such as convertible loans.

We currently have 150 investor partners, who are described in a directory on our website. We are seeking additional investor partners to join this programme for the future through this investor selection process.

The investor partnership programme will cover specific themes within the future economy, as described in Innovate UK’s plan for action, in particular:

net zero
health and wellbeing
next generation digital technologies and technology families

Innovation and ideas can come from anyone and anywhere. We want to see investments unlocked for the diverse and extraordinary talent in the UK. We are encouraging diverse applicants and inclusive project applications, pushing beyond the status quo.

We encourage innovation involving communities that are typically under-represented, including:

from regions that have historically accessed lower levels of investment (outside London, Oxford and Cambridge)
ethnic minority groups
women and other marginalised genders
people with disabilities
people with non-traditional education backgrounds

You will be asked to indicate the scope of your investment strategy for the next three years.

This competition closes at 11am UK time on the deadline stated in this Innovate UK competition brief. We cannot guarantee other government or third party sites will always show the correct competition information.

Funding type

Investor Partnerships

Project size

This competition is not offering any funding.

Accessibility and Inclusion

We welcome and encourage applications from people of all backgrounds and are committed to making our application process accessible to everyone. This includes making reasonable adjustments, for people who have a disability or a long-term condition and face barriers applying to us.

You can contact us at any time to ask for guidance.

We recommend you contact us at least 15 working days before this competition’s closing date to allow us to put the most suitable support in place. The support we can provide may be limited if you contact us close to the competition deadline.

You can contact Innovate UK by email or call 0300 321 4357. Our phone lines are open from 9am to 12pm and 2pm to 5pm UK time, Monday to Friday (excluding bank holidays).

Who can apply

We are seeking investor partners who want to invest in high growth potential micro, small and medium-sized enterprises (SMEs).

Your organisation must be an investor or be able to demonstrate that you can directly facilitate investment.

To be selected you must demonstrate that you:

are a credible investor, or can facilitate investment, with a clear investment strategy aligned to the Innovate UK plan for action for the future economy and have the ability to generate returns and add value to your portfolio businesses beyond financial support
have the capacity to invest in companies that are successful in their application to the investor partnerships programme
either have the capacity to follow your investment or to encourage other investors to fund further rounds of investment as and when required
have the capability to successfully transact investments and manage your portfolio
are in a position to lead the investment

How investors are selected

The process for becoming an investor partner is selective. Applications will be assessed and subject to due diligence checks by Innovate UK, before being considered by Innovate UK’s Investor Selection Panel.

By submitting an application, you agree to be bound by the terms and conditions which set out the roles, responsibilities and obligations of investor partners and Innovate UK.

Collaborative opportunities

Innovate UK Business Connect exists to connect innovators with new partners and new opportunities beyond their existing thinking, accelerating ambitious ideas into real-world solutions.

Innovate UK Business Connect will engage with all investor partners to build communities, including through flagship events, to drive engagement of investors with Innovate UK, its products and services, and domain areas.

Innovate UK also supports connections between investors and businesses including through the Investor Connect platform.

We will maximise opportunities for collaborative engagement across the wider Innovate UK and UKRI system with our investor partners including through supporting investor portfolio and prospective companies through Innovation Loans and spin outs through Innovation to Commercialisation for University Research (ICURe).

Innovate UK supports investor partners to understand future technologies and markets through foresighting and horizon scanning to support the development of their investment thesis.

Future SME selection competitions

SMEs will be able to apply for grant funding for a proportion of their eligible project costs, aligned with your investment into the business, through a series of competition rounds.

The process for identifying and assessing SMEs is described in the competition brief for each round of the future economy investor partnership programme. In all cases it will require the SME to apply through our Innovation Funding Service to a specific competition.

The SME's application will need to demonstrate that it falls within the scope of the future economy investor partnership programme, including within specific areas of focus where we have availability of funding in each round.

Applications will be independently assessed to identify the highest quality project proposals.

Applications will also need to demonstrate the additionality of the aligned investment led by the investor partner in terms of accelerating and increasing the investment as a result of the grant offered.

Applications will have to demonstrate the traction of the aligned investment in terms of the likelihood of completing the investment within a reasonable period, which we expect to be typically within three months after the grant funding decision is made.

We will inform you and the applicant whether we can offer grant funding to the business.

The grant funding will be subject to completion of our project setup process that includes checking the viability of the project and the eligibility of the costs to be covered. It is also subject to completion of your investment.

Previous applications

You can use a previously submitted application to apply for this competition.

Subsidy control (and State aid where applicable)

This competition does not provide any funding. Future SME competitions will provide funding in line with the Subsidy Control Act 2022. Further information about the Subsidy requirements can be found within the Subsidy Control Act 2022 (legislation.gov.uk).

Innovate UK is unable to award organisations that are considered to be in financial difficulty. We will conduct financial viability and eligibility tests to confirm this is not the case following the application stage.

EU State aid rules now only apply in limited circumstances. Please see the Windsor Framework to check if these rules apply to your organisation.

Further Information

If you are unsure about your obligations under the Subsidy Control Act 2022 or the State aid rules, you should take independent legal advice. We are unable to advise on individual eligibility or legal obligations.

You must always make sure that the funding awarded to you is compliant with all current Subsidy Control legislation applicable in the United Kingdom.

This aims to regulate any advantage granted by a public sector body which threatens to, or actually distorts competition in the United Kingdom or any other country or countries.

This award is classified as a Subsidy which does not form part of your Minimal Financial Assistance or De Minimis allowance.

Funding

Innovate UK has allocated up to £80 million to fund innovation projects in the current Spending Review period, aligned with investment from investor partners. Funding has been offered through regular rounds of the SME competitions from July 2022 to summer 2024.

This competition does not provide funding to the applicant investor. It is our ambition to seek further funding in the next Spending Review to enable us to deliver programmes in the future.

Potential SME applicants will be able to apply for grant funding for:

feasibility studies, which can have eligible project costs from £50,000 to £300,000, can last between 6 and 12 months and will have grants of up to 70%, with at least the same amount of aligned investment from or led by an investor partner
industrial research projects, which can have eligible project costs from £100,000 to £1 million, can last between 6 and 15 months and will have grants of up to 70%, with at least the same amount of aligned investment from or led by an investor partner
experimental development projects, which can have eligible project costs from £250,000 to £2 million, can last between 12 and 15 months and will have grants of up to 45% for micro and small businesses or up to 35% for medium sized businesses, with at least twice the amount of aligned investment from or led by an investor partner

Your proposal

Investor partnerships are aimed at supporting SMEs that seek support for R&D projects through Innovate UK grant funding and that also seek aligned investment from investor partners.

To be an investor partner, you must demonstrate credibility, capability, capacity, commitment and alignment of interest to the scope of the investor partnerships future economy programme.

Specific themes

We are looking to support projects that focus on the future economy areas included in the Innovate UK plan for action.

The broad theme areas are:

net zero
health and wellbeing
next generation digital technologies and technology families

We encourage innovation involving communities that are typically under-represented, including:

from regions that have historically accessed lower levels of investment (outside London, Oxford and Cambridge)
ethnic minority groups
women and other marginalised genders
people with disabilities
people with non-traditional education backgrounds

The funding within the Future Economy programme for the current Spending Review period is fully committed. Future programmes expect to cover a broad scope.

We have also delivered investor partnership programmes with other areas of focus as separate competitions. These have included the Create Growth programme from the Department for Culture, Media and Sport (DCMS) and the Farming Innovation programme from the Department for Environment, Food and Rural Affairs (Defra). If funding is made available, we may offer further programmes of a similar nature.

9 September 2024: Competition opens
17 September 2024: Online briefing event: watch the recording
Briefing slides are available to download from Supporting Information.
20 November 2024 11:00am: Competition closes
21 January 2025: Invite to interview
30 January 2025: Interview panel
3 February 2025: Applicants notified

Before you start

You must complete the full application form.

We will use the information that you provide, together with external assessment, to enable an investor selection panel to decide if you are suitable to be an investor partner in the future economy investor partnership programme. We will use assessors who have a good understanding of investment organisations.

Where we are working with more specialist funds or charities, we will make every effort to use assessors with relevant experience. The scores and comments provided by the assessors help inform the process by which we confirm you as an investor partner for the future economy investor partnerships programme.

The assessors will score your answers to questions 3 to 6. You will receive feedback for each scored question. Your answer to question 1 will be reviewed by our investments team to confirm your financial standing.

Your answer to question 2 will be reviewed and considered by the investor selection panel as an important part of our decision making process to encourage inclusivity in investment.

What we ask you

The application is split into two sections:

Investor details.
Application questions.

Accessibility and Inclusion

You can contact us at any time to ask for guidance.

You can contact Innovate UK by email or call 0300 321 4357. Our phone lines are open from 9am to 12pm and 2pm to 5pm UK time, Monday to Friday (excluding bank holidays).

1. Investor details

This section provides background for your application and is not scored.

Application team

Invite people from your organisation to help complete the application.

Application details

The lead applicant must complete this section.

Investor summary

Describe your organisation, how you invest, your regulatory status, your investment approach, the types of businesses you invest in and the size of your typical investments.

Tell us the current and expected level of your investment in businesses that are within net zero, health and wellbeing, and next generation digital technologies and technology families, described in the Innovate UK plan for action.

Describe your investment in businesses with founders from under-represented groups and those that support under-served communities. Provide an outline of your management team and key individuals that will be involved in this programme, their experience and the diversity of the investment decision makers in your organisation.

Your answer can be up to 500 words long.

Public description

Provide a description that we can use to promote you as an investor partner and enable SMEs to contact you. SMEs will be encouraged to identify and contact suitable investors from the pool during their application process.

You must include:

a dedicated email address or other information on how you wish to be contacted
your website
your investment criteria and a brief description of the types of companies you typically invest in
the value you can add to investee SMEs

Examples of public descriptions of our current 150 investor partners can be found on our website.

Your answer can be up to 400 words long.

2. Application questions

The assessors will score all your answers apart from question 1 and 2. You will receive feedback for each scored question. Find out more about how our assessors assess and how we select applications for funding.

You must answer all questions. Do not include any website addresses (URLs) in your answers.

Question 1. Your financial standing (not scored)

Describe:

the financial position of relevant entities involved in your investment activities, including providing financial statements for the past three years
the assets under management of relevant entities involved in your investment activities for the past three years, including at the time of submission of your application
where three years of historic financial statements or assets under management are not available, provide the most recent available information, including management accounts where appropriate
the regulatory status or authorisations of relevant entities involved in your investment activities
any investment by public sector entities in your assets under management, for example, investment by the British Business Bank through its Enterprise Capital Funds, or Regional programmes, or by British Business Investments through its Regional Angels Programme
the financial instruments you plan to use in this programme

Your answer can be up to 400 words.

You must upload a copy of your financial statements and your assets under management, or equivalent funds available for investment, to support your answer. These can be in up to three PDF documents. Each document can be up to 20 A4 pages long and no larger than 10MB in size. It must be in 11 point font size.

Question 2. Your approach to equality, diversity and inclusion (not scored)

Describe how you encourage diversity within your management team and portfolio companies, for example:

in terms of age, disability, gender, socio-economic background or ethnicity
among companies seeking investment from you to ensure that you have an investment strategy and approach that is inclusive
that does not limit access to capital for innovators from under-represented groups

Your answer can be up to 400 words.

Examples or evidence of the impact along with any statements or policies can be included as appendices.

You can submit up to three appendices to support your answer. They must be PDFs and can be up to 20 A4 pages long and no larger than 10MB in size. The font must be in 11 point font size .

Question 3. Your credibility as an investor

This question seeks to understand your credibility as an investor. This relates to your credibility in the market and your credibility to the SMEs seeking investment from the programme.

Describe your investment strategy specifying sectors, regions and any investment constraints, including your preference of investments and investment focus and how you generate returns.

Explain how you source investment opportunities.

Describe your investment strategy, including:

your typical investment size
your target returns
your approach to syndication with other investors
how you grow the businesses in your portfolio and increase their value or impact on society
your approach and track record in achieving successful exits for organisations you have invested in
your failure rates and write off levels within your portfolio

Explain how you add value to your portfolio investments beyond financial support and the expertise you can bring to actively build value in businesses with high growth potential.

Give examples of how you and your portfolio investments have historically delivered:

export growth and international expansion
high value job creation
turnover growth
supply chain enhancement, for example, where the supply chain of portfolio investments has had a positive impact on the UK economy
indicators relating to social, environmental or economic impact

Your answer can be up to 800 words.

You can submit up to three appendices to support your answer. They must be PDFs and can be up to 20 A4 pages long and no larger than 10MB in size. The font must be in 11 point font size.

Question 4. Your capacity for investment

This question seeks to understand your capacity for investment, both generally and specifically in relation to this programme.

Describe the size, investment period, percentage deployed to date and follow on expectations of your capital available for investment.

Tell us the amount of capital you expect to make available for aligned investment in new businesses to your portfolio and in follow on investment in existing portfolio investments through the investor partnerships programme.

Your answer can be up to 500 words.

You can submit up to three appendices to support your answer. They must be PDFs and can be up to 20 A4 pages long and no larger than 10MB in size. The font must be in 11 point font size.

Question 5. Your capability as an investor partner

This question seeks to confirm your professional approach to making investments and to conducting yourself as a professional investment firm.

Describe your approach to transacting investments and how you manage your portfolio including your decision making, due diligence approach and governance processes.

Tell us about your team members involved in sourcing, transacting and managing investments in the future economy areas and those involved in making investment decisions, such as members of an investment committee. You can provide short CVs in an appendix.

Explain your involvement to date with businesses who have received funding from Innovate UK, or why you are interested in working with innovative and intellectual property rich companies, if this is a new approach for you. Provide information about your involvement in previous Innovate UK investor partnership programmes if this is applicable.

Explain how you manage your portfolio, including:

your approach to portfolio management, including the level of engagement with portfolio investments
your approach to investor reporting
your approach to appointing directors, non-executive or investor, and how suitable individuals are identified
your approach to managing potential conflicts of interest
your approach to structuring investments to plan for responsible exits
how you deal with under-performing companies

Your answer can be up to 500 words.

You can submit up to three appendices to support your answer. One appendix should describe the skills and experience of the main people involved in sourcing, transacting and managing your investments. They must be PDFs, up to 20 A4 pages long and no larger than 10MB in size. The font must be in 11 point font size.

Question 6. Your alignment to the investor partnerships programme

This question seeks to understand your interest in the investor partnerships programme.

Explain how your investment strategy and your current portfolio align with the strategic objectives of Innovate UK as outlined in the Innovate UK plan for action and how your investment strategy might change as a result of this programme.

In which areas of the future economy will you be looking to make investments in the next three years? Outline the key factors that influence your investment strategy.

Describe:

your interest in the future economy and why you believe it is an exciting area for investment
your anticipated activity in this area, including the distribution of investments, average transaction size and timing of investments
how you will use this programme to access new opportunities and why the programme will make a difference
your experience of investing in businesses with an innovative offering
your experience of investing in businesses that have demonstrated their ability to grow and scale and contribute to the UK economy and society
your experience of investing in and supporting investee businesses through follow on funding and sourcing or syndicating with new investors
your experience of investing in organisations with mission–driven and entrepreneurial management teams or in supporting organisations to source executive and non-executive talent
your experience of investing in organisations with a focus on delivering social, environmental or economic impact

Your answer can be up to 500 words.

You can submit up to three appendices to support your answer. One should describe your relevant investment portfolio. They must be PDFs and can be up to 20 A4 pages long and no larger than 10MB in size. The font must be in 11 point font size.

Assessment

Your application will be reviewed by three independent assessors with experience in investment and working with investors.

You can find out more about our assessment process in the General Guidance.

Interviews

If your application passes the first stage of assessment, you may be invited to attend an interview, where you must give a presentation. Your interview will take place either online or at a designated location. The date and time of your interview will be included in your invitation.

Before the interview and by the deadline stated in the invitation email, you:

must send a list of who will attend the interview
must send your interview presentation slides
can send a written response to the assessors’ feedback

List of attendees

Up to three people from your organisation can attend, they must all be available on all published interview dates. We are unable to reschedule slots once allocated.

Presentation slides

Your interview presentation must:

use Microsoft PowerPoint
be no longer than 10 minutes
have no more than 3 slides
not include any video or embedded web links

Interview

After your presentation the panel will spend 20 minutes asking questions. You will be expected to answer based on the information you provided in your application form, presentation and the response to feedback.

Briefing slides

Download the briefing slides.

Investor selection applicant briefing Sept 2024.pdf (opens in a new window)

If your application is unsuccessful

If you are unsuccessful with your application this time, you can view feedback from the assessors and Selection Panel. This will be available to you on your Innovation Funding Service (IFS) portal following notification.

Data sharing

This competition is operated by Innovate UK.

Innovate UK is directly accountable to you for its holding and processing of your information, including any personal data and confidential information. Data is held in accordance with our own policies. Accordingly, Innovate UK and Innovate UK Business Connect will be data controllers for personal data submitted during the application.

Innovate UK’s Privacy Policy

Innovate UK Business Connect Privacy Policy

Innovate UK complies with the requirements of UK GDPR and the Data Protection Act 2018, and is committed to upholding data protection legislation, and protecting your information in accordance with data protection principles.

The Information Commissioner’s Office also has a useful guide for organisations, which outlines the data protection principles

Contact us

If you need more information about how to apply or you want to submit your application in Welsh, email support@iuk.ukri.org or call 0300 321 4357.

Our phone lines are open from 9am to 12pm and 2pm to 5pm UK time, Monday to Friday (excluding bank holidays).

Innovate UK or any of our partners will not tolerate abusive language in any written or verbal correspondence, applications, social media or any other form that might affect staff.

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