Funding competition Regional angel investment accelerator pilot: finding group partners

Angel groups can apply to partner with Innovate UK to distribute grant funding alongside their investment.

Register and apply online

Competition sections

Description

This competition aims to select suitable organisations to partner with Innovate UK. Together we will:

The selected angel investor partners (AIPs) will distribute grant funding for innovative research and development (R&D) projects to SMEs. This will be alongside investment from angels and other similar early stage investors.

This competition will identify 2 angel investor partners (AIPs) who will:

  • each be based in a geographical region where angel investment in innovative SMEs requires extra support
  • receive an allocation of £1 million to distribute as grants to SMEs alongside equity investment

Once selected, each AIP will work over 2 years with regional angel investors to:

  • identify innovative SMEs that the AIP’s angel investors expect to invest in
  • fund those SMEs to enable them to carry out research and development projects and grow using both grant and equity funding
  • support R&D projects assessed as suitable by Innovate UK, with costs of between £40,000 and £300,000, and with up to 50% of the eligible project costs funded by the Innovate UK grant

Funding type

Grant

Project size

There will be 2 Innovate UK grant allocations of up to £1 million, each provided to an AIP for distribution to SMEs.

Who can apply

In this competition we are looking for 2 angel investor partners (AIPs) who must be:

  • a legal entity (for example a company, partnership, university, charity or trust) with a UK office
  • either an angel network or angel group with access to your own investors or an organisation that has formed a collaboration with one or more angel networks or groups

This competition will select AIPs in 2 geographical regions.

You must be able to demonstrate that you:

  • have or will establish a recognised physical presence in your proposed geographical location
  • will have access to existing local angel investors
  • will increase local angel interest and capacity for investing in early stage, disruptive technology businesses
  • have access to innovative businesses seeking investment from the region
  • have helped fund, or can access the skills to help fund, early stage companies across disruptive technology areas
  • have suitable arrangements in place to meet operational requirements around distribution of grant funding, reporting, allocation of investments, confidentiality, data protection and so on

The investors that you will work with can include investors and angel groups from outside the proposed zones, including:

  • London investors
  • seed funds
  • accelerators
  • international angel groups

You must provide information on each of the angel groups you expect to work with to meet the objectives of this programme.

Identify any other collaborations, formal or informal, that may create deals or provide support and describe the value they bring to your proposal.

Funding

We will select 2 AIPs. Each AIP will be allocated £1 million, which they will hold on behalf of Innovate UK for the purposes of this programme.

If selected, you will use this funding to distribute grants to SMEs to fund innovative R&D projects. The SMEs must receive at least the same amount in new private investment from your angel investors and associated investors. The grant allocation must be fully committed within 2 years of the agreed start date.

Individual projects funded through the AIP must be run by an SME and have a total project cost of between £40,000 and £300,000. Only projects assessed as fundable by Innovate UK’s independent assessment process will be eligible to receive grant funding through the AIP.

Innovate UK will fund up to 50% of eligible project costs. Private investors must invest at least the same amount into the SME. At least 50% of this private investment must be from angel investors.

Investment management fees will be drawn from the £1 million allocation and will include:

  • assessment costs for each SME application
  • monitoring costs for each funded project
  • AIP fees for delivering the service

(Text update 2 Nov 2018: we have simplified the last bullet point above to remove the reference to schedule 2 of the allocation agreement as we felt this was confusing.)

As a result, the amount allocated to grant funding for R&D activities by SMEs will be less than the overall funding amount of £2 million.

Your proposal

The aim of this competition is to encourage regional angel investors to invest earlier into innovative technology businesses within their region. Proposals from angel investor partners should focus within one of these geographical areas:

  • zone A: the South West, Wales and West Midlands
  • zone B: the North West, North East, Yorkshire and Humberside, and East Midlands

In this competition we will identify an angel investor partner (AIP) to operate within each zone. An AIP does not need to cover an entire zone but must demonstrate increased impact within the zone. The AIPs will work with angel groups, individual angels and relevant organisations to:

  • raise awareness of investing in early stage disruptive technology companies
  • explain how SMEs that investors are considering investing in can apply for a grant for a project

You must demonstrate how this activity can result in business-led innovation through grant funding alongside an increase in private investment and a longer term increase in local angel investment capacity and interest.

Your proposal must identify:

  • who you will collaborate with and what other, more informal partnerships you will have
  • any existing investor capacity and interest, listing your portfolio of deals
  • which geographical area and sector you will focus on
  • your strategy for attracting new investors and encouraging existing investors to use the process
  • your success at attracting follow on funding
  • your strategy for encouraging diversity (for example gender or ethnic diversity) among the investor base and the applicant companies
  • your strategy for attracting companies seeking investment

You must demonstrate you have processes in place to:

  • manage the £1 million grant allocation
  • carry out administration
  • liaise with funded companies and their investors
  • track the progress of funded companies
  • provide agreed information to Innovate UK

Our independent assessment process will provide a level of validation. The grant funding to businesses is non-dilutive and will further de-risk the investment. The private investors will provide both capital and critical commercial business due diligence. This overall impact should be to prove the value of sharing opportunities with investor partners.

We will work with the successful applicants to develop and maintain an ‘investment manual’ of working processes. A draft version of this document will be available for you to review on our secure server when you apply.

Research categories

SMEs with investor interest selected by the chosen AIPs will be able to apply for grant funding for projects covering:
Our definitions of the eligible research categories and the definition of eligible costs follows the General Block Exemption Regulation 2014 (GBER), article 25. The definition of an eligible SME is set out in articles 1 and 2 of GBER, and you should seek independent advice on how to interpret the requirements.

Projects we will not fund

The grant funding will not be provided for projects that:

  • are not carried out by SMEs
  • are collaborative R&D projects
  • are carried out by SMEs that are not attracting at least the same amount of private investment into the SME, with at least 50% of the private investment being from angel investors
  • are carried out by SMEs that are located outside the UK (text update 29 October 2018: this read "outside the 2 zones" and we have edited to clarify it is "outside the UK")
  • cannot present evidence that their idea or concept has the potential to lead to significant return on investment, growth and scale-up of the business
29 October 2018
Competition opens
7 November 2018
Birmingham briefing event
2 January 2019 12:00pm
Registration closes
9 January 2019 12:00pm
Competition closes
29 January 2019
Invitation to interview
6 February 2019
Planned date for presentations to Investment Advisory Board (IAB)
22 February 2019
Applicants notified
12 March 2019
Confirmation of allocation

Before you start

To apply:

  • read the guidance for applicants for this competition
  • register online using the green button to go to our secure server and see the application documents
  • read the terms and conditions
  • complete and upload the application form and appendices

We will not accept late submissions. Your application is confidential.

You must use Microsoft Word for the application form or your application will be ineligible.

By submitting an application to operate as an AIP, you agree to be bound by the terms and conditions of the competition. The process for becoming an AIP is competitive. Applications will be assessed by Innovate UK’s Investment Advisory Board (IAB).

Eligible applications will be subject to an initial evaluation based on the information provided and public information sources about your organisation and any other angel groups or networks you are working with.

The process is competitive and the IAB will select a shortlist. The chosen applicants will give a PowerPoint presentation on their proposal and be interviewed by the IAB.

Following the presentations, you will receive feedback on your application. The IAB will select a preferred candidate for each zone and we will notify the 2 successful applicants. Post decision negotiations will then be conducted. Allocation will be confirmed by 12 March, by which time you must sign the legal agreement. This includes a confidentiality agreement.

Background and further information

The Regional Angel Investment Accelerator is a pilot programme based on previous investment accelerators delivered by Innovate UK and investor partners. Its aim is to provide grant funding for innovation projects alongside private investment in the early stage UK SMEs carrying out those projects.

If you need more information, contact the competition helpline on 0300 321 4357 or email us at support@innovateuk.ukri.org.

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