An introduction to business start-up grants in Scotland

Understanding the different grant sources will help you decide what might be suitable for your organisation. We can split the business funding avenues up into three main groups:

? Domestic-based funding – National funding to Scotland. At this level, Scotland has its own innovation centres with their own funding. For example, The Data Lab. There are multiple Innovation Centres, not always carrying an Innovation Centre title, but they all have some form of innovation mechanism that is there to support companies over their initial hurdles (a point that is so vital.)

This is where we also see our own enterprise agencies putting money in. For example, Scottish Enterprise’s SMART: SCOTLAND Funding. It’s worth noting that this funding is still available (and really relevant) at other levels.

? UK-wide funding – This point of funding typically sits within the UK government’s funding agenda and is pushed through Innovate UK or the other funding bodies. Our goal at The Data Lab is to encourage companies to apply through central government offerings, as well as local Scottish support.

The UK government has recently funded a new funding model called Advanced Research and Invention Agency (ARIA) that mimics Defense Advanced Research Projects Agency (DARPA), with a focus on a series of missions deemed ‘high-risk research innovation calls’. ARIA will exclusively focus on projects with the potential to produce transformative technological change or a paradigm shift in an area of science. While it is anticipated that most programmes may fail in achieving their ambitious aims, those which succeed will have a profound and positive impact on society.

? European/international-based funding – We often find this is the one companies don’t know much about. What’s interesting is that through the UK government’s negotiation strategy with many other trading nations (in the wake of COVID and also in the wake of Brexit), they’ve included a lot of innovation partnerships within trade arrangements.

The UK has now formally re-joined Horizon (the European-wide funding mechanism for innovation). This opens lot more funding opportunities for companies to be engaging with counterparts across Europe. These projects are usually multi-year, multi-partner engagements. The UK government are planning on endorsing Horizon now that we’ve re-joined the programme. As a result, they are offering a series of support programmes to help companies rebuild connections and relationships across the EU, often supported by a grant. While those are the three ‘main’ avenues, it’s worth noting that, at The Data Lab, our External Funding Service is not always just about navigating grants. We can also direct people/organisations to other start-up support systems.

Grant programmes available for Scottish start-ups

We’ve already touched on this lightly in the ‘Domestic-based funding’ opportunities above, but let me elaborate:

• Scottish EDGE is Scotland’s biggest business funding competition, offering funding awards. It consists of four competition categories: Scottish EDGE, Social Enterprise EDGE, Young EDGE and Wild Card EDGE. Alongside this, there are also five special awards within the Scottish EDGE: category for a net zero-focused business (Net Zero EDGE), a circular-focused business (Circular Economy EDGE), a commercial product-based business (STV Growth EDGE), and a biotech-focused business (IBioIC EDGE). To date, they have supported over 569 early-stage Scottish businesses.
• South of Scotland Enterprise, Highlands and Islands Enterprise and Scottish Enterprise are Scotland’s national economic development services. These individual agencies are particularly good at bringing out their own localised support and have individual funds available for their own regions. Funds can range from those built for a specific area, to a very generic call that anybody can apply to.
• Scotland has several Innovation Centres backed by the Scottish Government, with support from its enterprise agencies and universities. They’re a great point of resource for business at this early grant stage, as they advise on routes to funding and offer funded internships, secondments, and BSc, MSc and PhD placements.
• UK Government early start-up funding. There have been some really big changes in the way that Innovate UK (the UK’s innovation investment arm) are supporting start-ups. I’m particularly enthusiastic about this because they have shifted their focus to look at overall support to companies; it’s no longer just about giving them funds; it’s around inviting them to acceleration, accessing mentors and gaining real overall support across the whole country. They appear to have noted that, as a funding body, they’ve been too difficult to apply to for a lot of SMEs and (in the past) it’s put a lot of organisations off. As of 2023, they’ve dedicated a number of funding calls to companies that have never received Innovate UK funds before, and they’ve simplified questions and the process to apply through Innovate UK Business Growth. ?

If you’d like to stay up to date with funding opportunities, I often post updates on grant opportunities in our Funding Support Group in The Data Lab Community.

Qualifying criteria for business start-up grants

The qualifying criteria for grants can vary and, as a result, is quite difficult to generalise. However, there are a few key actions that need to be in place before applying for grants. While they might seem obvious, we see a lot of organisations fall at this first hurdle:

• Business bank account – This is one of the things that we’ve seen time and again; organisations apply for funding, they are successful, but they’ve not properly read the criteria of the funding application. Make sure you have the correct accounts in place.
• Investment upfront – What some don’t realise is that a lot of business support grants are paid in arrears. You often still need to have enough investment upfront, and you need to be able to explain where this investment is coming from before Innovate UK or other funding bodies will often fund you in terms of your private sector contributions.
• Make sure you are registered properly at Companies House – Register your company
• A good accountant – A lot of the time, the government has subsidies that you can claim tax refunds on for research and development activity. This is something that Business Gateway will help people to navigate.
• Engagement with seed fund networks – Engaging with the right early investor(s) for your business. You want a partner that can facilitate progress whilst working alongside you.

We recommend that you have the above in order before continuing with grant applications. If you’re having difficulty with any of these points, Business Gateway provides a full host of services to support you, and they have a lot of helpful guides; how do I start my business? What type of bank account do I need? How do I set myself up for auditing and accounts? How do we get an accountant? The Innovate UK Business Connect (previously known as the Knowledge Transfer Network KTN) also produce a lot of reports in this space.

Looking for more insight? Read the full blog by Adam Turner our Head of External Funding over on out website > https://bit.ly/3Vyi5bJ