by Bryan Lister, Consultant – InViva Healthcare Management
Bryan Lister has over 20 years sales and marketing experience in the pharmaceutical and medical devices industries . He works as a project manager, an independent grant consultant and a grant assessor in the Yorkshire & Humber healthcare industry.
If you have any questions for Bryan, please post them below and we'll pass them on.
For any R&D based business, an injection of external funding without loans or dilution of shares is an attractive proposition even at the best of times. As the UK increasingly becomes a knowledge based economy, the Government and its agencies are keen to help co-fund R&D projects with commercial potential with the objectives of stimulating growth, competitiveness and boosting employment. Grants are just one mechanism to help this happen.
Applying for grants is a competitive process though and as always there are winners and losers. In the name of equality, every competition represents another opportunity to apply for, and hopefully win, important funding for a project based upon its own merits. However, one minus point that may be levied, is that some companies better understand how to apply for grants and consequently enjoy better success rates with their applications than companies who may be applying for the first or second time. In the tips below, I will aim to highlight some of the factors that will help those new to grant competitions to improve the quality of their applications and chances of success.
1. Know the Assessment Process
Applications are marked like exams, by a number of independent assessors. Be aware that each section on an application carries a number of points and a marking scheme to guide assessors on how they should be awarded.
‘Notes for Guidance’ are made available to applicants along with the application forms. These give finer details of the questions being asked in each section of the application form, and the information that is required. It is important for assessors to be able to see that every sub-question has been addressed. It is therefore crucial that answers are well structured and subdivided to highlight that all the necessary information has be given. Making the information jump out makes it easier for assessors to award points.
2. Know what you are trying to achieve
In an ideal world, a company will have already identified a particular project that they would like to carry out, hopefully taking justification for it from an opportunity they have seen in the market. At the other extreme, the company may conceptualise a project after learning about a particular grant call, and creating a project that fits in with the scope of the call. In reality, it is probably somewhere in between the two. i.e. the publication of a grant call may stimulate thinking within the organisation about how it may deploy its technology differently, if it can be advanced.
The key here is to be quite decisive about exactly what it is you hope to achieve, what your starting point is, and know how you could demonstrate that you have achieved it. The terms ‘research’ and ‘development’ are often used in the same breadth, but Yorkshire Forward offer separate research grants and development grants which will have different types of endpoints. For instance, the output from a research project maybe a technical report that summarises the findings that demonstrate ‘proof of concept’ has been reached. The endpoint from a development project may be a prototype product.
3. Eligibility
Before proceeding any further, it is important to ensure that the applicant, and any collaborators involved, are eligible to receive funding and meet the funding criteria. Factors that may exclude participation may include: company size, current receipt of other public funding for same project, company location, previous receipt of de minimis funding. Funding bodies often have competition helplines, so if in any doubt, a phone call to them can clarify your position before going any further.
4. Project Scope and Gateway questions
Some types of grant are theme specific (e.g. from the Technology Strategy Board), so it will be necessary to demonstrate that there is a good fit (or ‘alignment’ to use grant parlance) between the project proposal, and the objectives of the funding body. As important as the technical objectives of the project, is a realistic vision of how the project outputs can be eventually commercialised. You should be prepared to explain what unfulfilled need the outputs may serve, potential market demand and how that market could be reached.
A good response to the ‘Gateway’ question is absolutely vital. Failure to demonstrate alignment to the grant call will mean the application falls at this first hurdle, and will therefore not be given further consideration.
5. Getting a team and plan together
It goes without saying that a project should have a beginning, integral milestones and a clear end. This is the time to get key people around the table and break down the project into discrete work packages, identifying responsibility for each of these, estimating the manpower required, and highlighting any key dates that will be cast in stone. The best way of pulling this information together is to produce a Gantt chart. It may be helpful at this stage to involve an external person who can add a more objective prospective to how the project plan looks, and most importantly, ask does it look realistic? A simple way to produce a Gantt chart is to use Microsoft Excel. As most people are comfortable working with Excel, it provides an easy format for collaboration between team members and organisations, where everyone can have an input to put highlight important considerations.
Formulating the project plan will also show up any gaps that may need to be plugged by engaging subcontractors. This is a good opportunity to speak to contract organisations, get a feel for the timescales they work to, their capabilities, availability and likely costs.
This is also the time to appoint a Project Manager (PM). This is even more important if it is going to be a collaborative project involving partner organisations who will be stakeholders, as a lead organisation needs to be defined. As the number of people or organisations working on a project increases, it immediately becomes more complex to manage, so this should be reflected in the time and costs allocated to project management. A £1m 2 year project is not something that can be adequately managed by a PM working one day a month on it, when 10-20% of their time is more realistic.
Projects can often be described as ‘Science to Business’ or ‘Business to Business’ with different levels of funding being applied. It is important to get this right by checking the ‘Notes for Guidance’ and/or contact the competition helpline for their advice if unsure.
Technically, academic institutions can be the lead partners in many collaborative schemes, but it may be preferable to have a company in the driving seat as the lead partner to demonstrate that there is a definite commercial drive overseeing the whole project.
6. Answer the questions and illustrate
It is increasingly common to complete standardised electronic application forms that have a limit on the number of words/characters that can be used to answer questions. As Mark Twain once said “I didn't have time to write a short letter, so I wrote a long one instead.”. In other words, it can be a challenge in itself to be concise and it takes time to edit down answers in to something acceptable.
From this point of view, it is often easier to work in something like Microsoft Word to create answers to specific questions and use the built in word count/character count functions to keep check on how long they are. It is also makes it easier for several people to collaborate on answering questions, so long as version control is good. It is then a case of copying and pasting into the online documents and giving it a final edit as necessary.
Punctuating answers with quantitative data illustrates that thorough research underpins the business case being made to justify funding the project. Saying that a potential market is ‘big’ or ‘growing’ is rather meaningless and gives no sense of scale or ambition. Stating that a particular segment is worth $ US 10m in 2009, with a projected annual growth rate of 10% year on year for the next 5 years and being able to quote an independent source is a much more appropriate and credible validation. Providing good quantitative information can be reassuring to assessors and help them award valuable points, otherwise the ‘absence of evidence’ is evidence of absence.
7. Time and Budgets
As well as the nature of the project and defining what it a successful endpoint, it is important to realistically define the time and budget required for the project. All too often, companies assume their project will be easier than it is, never run late and come in exactly on budget. As R&D is an iterative process, this is seldom the case!
The single biggest cost in most projects is people. Using the Gantt chart, identify which members of staff are to be potentially allocated to a project and when, and what percentage of time they are likely to spend on it. For internal purposes, creating a spreadsheet with this information and including figures for individual salaries and National Insurance costs, will enable a realistic cost build up.
In most grant schemes, overheads are allowable as an expense. In general, overheads ranging from 40-60% are quite normal and acceptable. However, when applying any overhead, it is important to be able to justify the number used. The company’s auditors may be able to perform a calculation that illustrates the overhead figure to be applied, or the grant body may provide their own calculation tool (normally an Excel spreadsheet).
One of the biggest mistakes when making a grant application, is to underestimate time and budgets. When teams of assessors mark an application, this in one of the key indicators used to assess how likely the project is to succeed. On the whole, it is wise to include contingencies in all time and cost calculations, as things don’t usually go to plan. It is also seen as a big mistake to request too little funding as this could easily jeopardise the chances of the project succeeding.
Most SME companies are going to be VAT registered. When it comes to handling costs for the purchase of materials or engaging subcontractors, it is important to note that these should always be handled net of the VAT. Funding bodies are not interested in VAT, that’s a job for HMRC.
8. Risks
Project risks are good and to be expected! Grant awarding bodies such as the Technology Strategy Board or your local Regional Development Agency make grants available to companies to stimulate innovation by offering to share in the risk. However, they are also accountable for distributing public money and therefore need evidence that the major risks have been identified.
Suggested categories to categorise risks are: technological, (IP), time, capital, markets and people. In general, companies are comfortable with technological risks and patents because they are experts in their field and therefore know the territory. Arguably, it is the other categories that represent the more likely risks, but applicants address these more weakly.
Attention should be given to identifying potential risks, how likely they may be, their impact, and appropriate mitigation strategies. Taking market risks as an example, it may be possible to ask for a letter of support from a key opinion leader (KOL) or a market facing company, that endorses the project’s raison d’être and validates the case for the project to be funded. Such data could be included in appendices and referenced from the answers.
9. Funding your share of the costs
Most grant schemes exist to support business with a portion of the overall costs. This can vary from scheme to scheme, but commonly they can cover 40-60% of the total. If the overall assessment of the project plan is favourable, the final hurdle is to demonstrate that the business is solvent and capable of covering its share of the costs for the duration. Such information may be called for as part of the application, by submitting copies of the last audited accounts, or an offer may be made in principle, subject to appropriate due diligence. Extra information such as evidence of bank or shareholder loans, or an expected R&D Tax Credit could be included in appendices to demonstrate solvency.
10. Get the submission in on time
Other common reasons for an application to be rejected include submission after the competition deadline, an incomplete application or even a wrong file name. Be careful! When documents are submitted over the internet to a server, the server is always right! If the competition closes at midnight and someone submits their application just before, it may not arrive in its entirety before 00:00am and will therefore be considered late. So don’t leave submission until the last hour. Instead, it is good practice to keep uploading forms as ‘work in progress’ in advance of the closure deadline. Therefore if anything does go wrong with your IT system or internet connection, you can be sure that a copy has been lodged.
It may seem a daunting task locating and applying for grants. However, the benefits certainly outweigh the negative points, and I would thoroughly recommend businesses to participate in the competitions.
Useful links:
Yorkshire Forward Funding Finder
J4B Grant Database
Technology Strategy Board competitions