By Jake Williams
Between finishing my bachelor’s degree at the University of Leeds in May 2016 and starting my masters in September, the country voted to leave the European Union. With such a monumental event happening, there was an interesting opportunity to research the potential impact of Brexit for the North East SME’s innovation community.
About the Research:
The research set out to understand how innovation participation could be impacted by the loss of European Regional Development Funding post-Brexit. Within the research, it was assumed that once leaving the EU in 2019, the UK would no longer take part in any funding programmes founded by the EU.
The research was conducted with the help of the North East Business and Innovation Centre (BIC), who provided experts to talk with and great insight into innovation funding. Six of the BIC’s clients, varying in size and sector, shared their funding experiences and expertise in the area. The research identified how the interviewees’ experiences with funding has benefited them and the importance of funded programmes similar to the BIC’s SME Innovation Programme.
Findings:
Five main benefits of gaining innovation funding were shown by the six interviewees:
Risk alleviation – expressed by all interviewees, having the assurance that a percentage of that cost (often up to 40%) for innovation was offset against funding helps to drive innovation. It was clear that cash-flow constraints can prohibit SMEs taking the step towards spending on innovation.
Acceleration – Put simply, the money can accelerate the speed to which a product/service can reach commercialisation as self-funding innovation could happen over a course of a few years.
In-depth innovation – Without the innovation funding, many of the interviewees detailed how they would have still gone ahead with the innovation project themselves. However, the extra funds allowed for in-depth innovation that offered projects to be sourced adequately and how the product/service would have been less sellable without the in-depth stance taken because of the funds.
Collaboration – Many funds which were discussed involved multiple parties working on a set goal. Not only did this offer the ability to transfer knowledge, it also offered the ability to develop networks that would later establish an SME with a larger firm. Such examples were businesses who proved themselves to Original Equipment Manufacturers throughout a project and later became providers of components to them.
Assurance for potential customers and investors – Interviewees expressed how the funds reassured their investors by showing the company can attract additional funds, thus validating their business. Furthermore, customers were made to feel comfortable too, one example showed how the funding allowed a prototype to be formed which could be placed on the desk of a potential customer. This prototype provides a stronger message of assurance to a customer than an idea or concept drawing ever will.
Why should a business involve themselves in funding now?
Given Brexit is surrounded by uncertainty, it is difficult to predict how involved the UK will be with the EU after the decoupling and where the UK will choose to spend the money previously sent to the EU. However, with the assumptions taken during the research and the contributions made by the interviewees, SMEs should certainly consider the available funding pots as soon as possible.
I would like to thank everybody that helped with the completion of this research project. This includes all interviewees who gave their valuable time and wisdom to provide this research with some substance. I would like to credit Anthony Greenfield for his supervision and Elizabeth Shaw from the North East BIC who provided all the valuable contacts for the research.