Knowledge Network Programme

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Knowledge Network Programme Funding (Work in
Progress) Dr Jason Wiggins Knowledge Network
Funding Advisor
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What is the Knowledge Network Programme?

• The objective of SEEDA's Knowledge Network
  Programme is to bring businesses and the
  knowledge base together, to exploit research
  opportunities, catalyse collaboration and bring
  more innovation to market.

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Active Knowledge Networks

• There are currently 7 active Knowledge
  Networks
• Security Innovation Knowledge Network
  (Security-KIN).
• The Knowledge Network for Autonomous Systems
  (MARVIN).
• Environmental Decision Support Network.
• The Air Traffic Management Knowledge Network.
• The Knowledge Network for Nano Micro Technology
  (Nano-In).
• The Digital Content Knowledge Network
• The Smart Energy Knowledge Network

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A Major Motivator?




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Types of Funding

• Free money
• Loans
• Equity
• Projects Programmes
• Working with Universities
• International Opportunities

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Free Money

• Unsurprisingly, not too much about!
• Mainly the RD Tax Credits
• Following slides taken from a presentation by
  Nick Munn of the DTI from November 2005

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Why RD tax credits?

• RD drives company profitability and overall UK
  productivity
• But companies under-invest in RD
• "Spillover benefits" - private returns for RD
  lower than public returns
• Financing constraints
• Long timescales / high risks
• RD tax credits address these problems

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How RD tax credits work

• Limited Company (only) makes claim as part of
  Corporation Tax return 3 boxes on CT form
• 125 or 150 of RD eligible costs subtracted
  from company profits reduces CT
• or (for SMEs not in profit) can exchange each 1
  of eligible costs for a cash payment of 24p
• Can revise previous years CT return to claim SME
  payable credit retrospectively
• Non-payable claims can date back 6 years but
  may save trouble to claim now.

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Am I doing RD? RD definition

• Based on accounting standards (SSAP/IAS)
• New, clearer definition applies from 1 April 2004
  see www.dti.gov.uk/rd-guide
• RD is basically work to resolve scientific or
  technological uncertainty aimed at achieving an
  advance in science or technology
• Just using technology isnt enough!
• Company should be able to say what advance its
  seeking and what the scientific or technological
  challenges to be overcome are.

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Qualifying costs

• Must be revenue expenditure (not capital) on RD
  related to the trade of the company
• Staffing costs for staff actively and directly
  engaged in the RD activity all wages, pension
  contributions etc. but not benefits in kind
• Not support staff (admin, maintenance)
• Includes the cost of externally provided
  workers
• Consumable items and stores
• Items used up in the RD activity dont have to
  be physically stored
• Includes utility costs (power, water fuel)
• Includes short-term software licenses
• Not rent, equipment purchases etc.
• Some subcontracting costs

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SME and large companies

• Basic RD tax credit system is the same for both
  SMEs and large companies.
• SMEs can get more generous treatment if they
• Meet the EU SME definition (lt250 employees and
  either turnover lt50m or balance sheet lt 43m
  not part of a larger group)
• Are spending their own money (not grant-assisted
  or subcontracted work VC-funded firms are OK)
• Own the intellectual property (IP) from the RD
• SMEs not meeting these conditions (e.g. because
  they receive state aid or another subsidy) get
  tax credits like a large company.

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What RD tax credits dont do

• Cover capital expenditure on RD (theres a
  separate 100 capital allowance instead)
• Cover ancillary costs like recruitment,
  maintenance, raising finance and marketing
• Reward the creation of IP or innovative content
• Solve all the problems of financing your RD

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Loans

• There are a number of options available
• Normal sources, ie friends, family, banks etc
• Proof of Concept funds
• Small Firms Loan Guarantee
• FSE Accelerator Loans

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Proof of Concept PoCKeT

• Key facts figures
• For Proof of Concept work
• Up to 60,000 available
• For SMEs working with a HEI
• Large age spent with the HEI
• If successful, loan is repayable
• At 5 of revenue
• Capped to 150 loan amount
• 5 year time limit
• Written off if unsuccessful

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Small Firms Loan Guarantee

• New companies may experience difficulties
  borrowing money from banks. Small Firms Loan
  Guarantee can help
• A guarantee to the lender covering 75 per cent of
  the loan
• Borrower pays 2 of the loan payable per year as
  the premium (directly to the DTI)
• Loans can be up to 250,000
• Terms can be up to ten years
• Company must have been trading for less than 5
  years

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Accelerator Funds

• There are other loans available for more
  developed companies. Main one is the Finance
  South East Accelerator Fund.
• 10 million loan fund (total) which supports SMEs
  in the South East with the potential for
  significant growth (early stage or established
  companies).
• For entrepreneurial businesses who require the
  level of growth investment provided by risk
  capital, but which are currently reluctant to
  relinquish an equity stake.
• The Accelerator Fund can lend from 25,000 to
  100,000.
• An additional 100,000 can be made available
  after a period of 9 months.

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Equity

• Raising money through equity sale is possible
  at many stages of company development
• Angel investors to start
• Venture Capital
• IPO / Stock Market Listing

Always get professional and legal advice!
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Projects Programmes

• There are a reasonable number of different
  schemes that are currently being run. The common
  feature is that they pay only part of the total
  cost.
• SFIE
• Grants for R D
• DTI Collaborative R D
• DTI Innovation Platforms

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SFIE(Selective Finance for Investment in England)
There are a number of geographic issues with this
fund. The exact level of support varies according
to location.

• Generally 15 of capital
• investment can be claimed
• SFIE must make a difference
• Project cannot have started
• Must be (locally) unique
• Must be strategically important
• Seems complex but is simple!

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Grants for R D

• In summary What SMART awards became
• Four levels
• Micro
• Research
• Development
• Exceptional
• Funded at up to 50 of total project costs
• Apply through SEEDA

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Grants for R D
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DTI Collaborative R D

• This is currently the mainstay of DTI funding.
  Lots of funding is going into it 370 million
  over three years (2005-2008)
• Important points
• Got to be collaborative
• Business / Business
• Business / Academic
• Larger groups
• Calls in the Spring Autumn
• Next call announced on 2nd November 2006

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DTI Collaborative R D

• Continued
• All bids are on the basis of matched funds
• Typical awards range from 500,000 to 1.5million
• Dont apply for less than 250,000
• Three levels of funding (They can and do vary
  from call to call)
• Basic Research, typically 75 funded
• Applied Research, typically 50 funded
• Experimental Development, typically 25 funded
• Next call announced on 2nd November 2006

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DTI Innovation Platforms

• These are a new package being setup by the DTI.
  There are two pilot schemes
• Network Security
• Cyber Security KTN leads
• 350 businesses engaged
• Intelligent Transport Systems
• 6.5million funding
• Over 5 years
• Business led network
• Includes SEEDA project
• Not much information is available yet, virtually
  nothing on the DTI Website

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Working with Universities

• The UK University Full Economic Cost model
  can make direct engagement seem expensive. There
  are ways to help mitigate that
• KTP
• Follow on Funding
• Engineering Doctorates
• CASE Awards
• Lambert Toolkit
• (This section on Working with Universities is
  work
• in progress and is not a full picture of
  the situation)

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KTP(Knowledge Transfer Partnerships)

• A cost-effective way to engage with academic
  research. Its basic approach is that somebody is
  employed to do a project
• Average annual project cost is about 60,000
• SME pays about 1/3, large companies about ½
• Government pays the balance
• Comprehensive website listing
• Benefits
• Costs
• Process
• Current vacancies
• SEEDA just approved a Mini-KTP package

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Follow on Funding(From the EPSRC)

• The Research Council Follow-on Fund aims to
  help researchers in bridging the funding gap
  between traditional research grants and
  commercial funding.
• Funds follow on from academic work only
• Support is provided for the very early (pre-seed)
  stage of turning research outputs into a
  commercial proposition.
• Annual calls due this Autumn!
• 12 months duration
• Funding of up to 110k (at 100 of full Economic
  Costs)

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Other Methods

• Engineering Doctorate
• Broadly equivalent to a PhD
• Student spends ¾ of their time in the company
• Less costly than direct research sponsorship
• CASE Awards
• A way to co-fund a student doing a PhD
• Competitive process
• Annual call
• Lambert Toolkit
• A predefined set of contracts for academic
  collaboration

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International Opportunities
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International Opportunities

• UK Trade Investment has a number of packages to
  help companies do business internationally
• Passport to Export
• UK TI flagship programme for new and
  inexperienced exporters
• Provides the training, planning and ongoing
  support needed to begin a
• successful export operation
• Business Opportunities News
• An e-mail newsletter to be kept aware of
  international opportunities
• Sign up for free
• (This section on International Opportunities is
  work
• in progress and is not a full
  picture of the situation)

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International Opportunities

• Continued
• Overseas Market Introduction Service
• Very low cost international market intelligence
• Variety of engagement levels and costs (From
  ??? to 2000)
• Tradeshow Access Programme
• Three possible grant of 1800 to attend
  designated international show
• Possibility of 1500 grant to attend an
  alternative show
• (This section on International Opportunities is
  work
• in progress and is not a full picture
  of the situation)

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Websites for further information

• Knowledge Network Program Web Site
  www.southeastknp.co.uk
• Contacts
• Jason Wiggins KNP Funding Advisor Email
  jasonwiggins_at_seeda.co.uk
• Dr Ceril Jones KNP Manager Email
  CerilJones_at_aol.com
• Tax Credits
• DTIs Research Development homepage
  www.dti.gov.uk/randd
• Inland Revenues information
  www.hmrc.gov.uk/randd/index.htm
• DTI information on companies RD
  www.innovation.gov.uk/rd_scoreboard/home.asp
• Proof Of Concept
• Finance South East (General)
  www.financesoutheast.co.uk
• Finance South East (Specific Info)
  www.financesoutheast.co.uk/desktopdefault.aspx?tab
  Index0tabId494

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Websites for further information

• Small Firms Loan Guarantee
• Overview
• www.businesslink.gov.uk/bdotg/action/detail?r.l3
  1073868460r.l21074453326r.l11073858790r.ssc
  typeRESOURCESitemId1074447105
• List of participating lenders
• www.sbs.gov.uk/sbsgov/action/detail?r.l370000003
  57r.l27000000351r.l17000000271r.ssctypeRES
  OURCESitemId7000029522
• Accelerator Funds
• Finance South East (General)
  www.financesoutheast.co.uk
• SEEDAs information
  www.seeda.co.uk/Work_in_the_Region/Funding__Advic
  e/Accelerator_Fund/
• SFIE
• SEEDAs overview
• www.seeda.co.uk/Work_in_the_Region/Funding__Advic
  e/Selective_Finance_for_Investment_in_England/

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Websites for further information

• Grants for R D
• General Overview
• www.seeda.co.uk/Work_in_the_Region/Fundin
  g__Advice/Grant_for_Research__Development/
• Business Link Information
• www.businesslink.gov.uk/bdotg/action/detail?r.l3
  1074463677r.l21073866776r.tRESOURCESr.i10750
  65254r.l11073858790r.smtypeRESOURCESitemId
  1074469930
• DTI Collaborative RD
• Overview www.dti.gov.uk/innovation/tech-pr
  iorities-uk/about_the_programme/CRD/page11705.htm
  l
• Current Competitions www.dti.gov.uk/innov
  ation/tech-priorities-uk/competitions-for-funding/
  index.html
• Technology Areas
  www.dti.gov.uk/innovation/tech-priorities-uk/tsb/p
  age27993.html
• DTI Innovation Platforms
• Overview www.dti.gov.uk/innovation/t
  ech-priorities-uk/innovation_platforms/index.html
  

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Websites for further information

• Knowledge Transfer Partnerships
• Overview www.ktponline.org.uk/
• Example University site www.brighton.ac.uk/
  ktp/
• Follow on Funding
• EPSRC Overview
  www.epsrc.ac.uk/researchfunding/fundingopportuniti
  es/follow-onfund.htm
• General Overivew
  www.rcuk.ac.uk/fof/
• Others
• Engineering Doctorate
  www.epsrc.ac.uk/PostgraduateTraining/EngineeringDo
  ctorates/default.htm
• CASE Awards www.epsrc.ac.uk/Postgrad
  uateTraining/CASEforNewAcademics/default.htm
• Lambert Agreements
• Overview www.innovation.gov.uk/lambertagreement
  s/index.asp?lvl12lvl20lvl30lvl40
• International Opportunites
• Passport to Export
• Business Opportunities News
  www.uktradeinvest.gov.uk
• Overseas Market Introduction Service