Innovative businesses need more funding support: two opportunities for accountants

The Government is investing heavily in key sectors which it believes will bring the most growth to the economy. The funding landscape to support these businesses is changing across UK Research & Investment, Innovate UK and the British Business Bank. For accountants, that creates two opportunities: helping existing clients find the right finance and positioning your firm to attract more of these fast growing, innovative businesses.

We recently spoke to Capitalise's new Head of Partnership Management, Wendy Smith, about what these changes mean for accountants and their clients. Wendy brings a highly knowledgeable perspective to the subject. Before joining Capitalise, she has spent over 10 years in the innovation space, with Innovate UK, their Business Growth arm and in R&D tax credits. In our interview, Wendy explains that UK Research & Investment’s new strategy, including Innovate UK, represents a shift towards identifying high potential companies and providing more intensive support to help them commercialise, grow and scale.

But grants alone cannot fund every innovative business. As Wendy puts it: "They can't just give grants." So what should accountants be doing to attract & support these exciting businesses?

1. Help your innovative clients find the right funding

Start by identifying which of your clients are genuinely innovating. Do you have clients developing new technology, products or processes? Are they investing heavily in R&D? Do they have ambitious growth plans which require external capital? If so, funding should become part of your regular advisory conversation.

Looking beyond grants

Innovate UK remains an important source of grant funding and the Innovate Business Connect portal allows your clients to search for them. Also register for communications from your local Growth Hub or Mayoral City Region, as these will provide the other main source of grant funding going forward.    Then recognise that businesses are likely to also need debt or equity to fund the journey from R&D through to commercialisation and scale.

• Government Innovation Loans competitions

• Angel and other equity investment

• Asset finance for equipment and technology

• Working capital facilities

• Other commercial lending ideal for growing businesses such as invoice finance

Wendy highlights a particular challenge for innovative businesses: they can have strong ideas and significant growth potential but still need support to understand their financial position and become ready for commercial lending. This is where accountants can add considerable value. At Capitalise we can help you explore funding from our lender panel and identify potential commercial funding alongside, or instead of, grants and equity.

Action: identify ten innovative or fast growing clients and ask what funding they will require over the next 12 to 24 months.

2. Make sure innovative businesses can find your firm

There is another opportunity: winning more innovative businesses as clients. Wendy makes an interesting observation from her time advising businesses through Innovate UK. When innovative companies needed an accountant, she would look at accountancy firms' websites to see whether they demonstrated experience of working with businesses like them. Too often, they didn't.

Most accountancy websites still focus heavily on compliance. An ambitious founder looking for help with innovation, funding and scaling may struggle to distinguish one firm from another. So demonstrate your expertise. Build content around:

• R&D tax credits: practical guidance and changes affecting innovative companies

• Innovate UK's new strategy: explain where funding and support are being focused

• Grants: highlight relevant opportunities and application deadlines

• Equity funding: explain angel investment, venture capital, EIS/VCT and investor readiness

• Debt funding: explain when borrowing could complement grants or equity

• Case studies: showcase clients which have successfully innovated, raised finance or scaled

Case studies can be particularly valuable. They demonstrate that you have already advised businesses facing the same challenges as the founder reading your website. As Wendy explains, an innovative business wants an accountant with a track record of working with smaller companies that successfully scale, because that demonstrates relevant knowledge and experience.

Action: look at your website through the eyes of an innovative founder. Would they immediately recognise that your firm understands R&D, funding, innovation and scale-up businesses? If not, start creating that evidence.

Open the conversation - and stand out

The publication of Innovate UK's new strategy creates an opportunity for accountants to become much more involved in the funding journey of innovative businesses.

Watch the full interview below with Wendy Smith to hear her explain the changes at Innovate UK, where funding and support are heading and why she believes accountants have an important role to play.

Then consider two questions: which of your existing clients could benefit from this support and what are you doing to attract the next generation of innovative businesses to your firm?

For help exploring commercial finance options for your innovative and fast growing clients, speak to your usual Capitalise contact or email partner.support@capitalise.com.