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Thrive is set up by Funding London, a venture capital company bridging the finance gap for early stage businesses based in London. With over a decade’s experience in supporting the startups of London through a variety of funding vehicles, Funding London sensed a need to illuminate the ever-evolving scenario of London’s early stage businesses.

Thrive features interviews with and opinion from budding entrepreneurs, investors and industry experts. A mix of contributors from all areas of the industry is desired in order to spark genuine discussion about ongoing critical issues. While it showcases the effectiveness of successful ventures, it also encourages sharing lessons learned from missteps and unsuccessful projects.

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Growth · 27 March '17

R&D and Grants Workshop 14th March 2017

On 14 March, we ran our third workshop for the year and our fourth portfolio activity for 2017. The discussion on this occasion was around Research & Development Tax Credits and Grants.

We were very fortunate to have Grant Tree as experts in-house for the day and several of our portfolio companies. The approach was to create a forum where key information is provided followed by a discussion on each company specific circumstances.

In case you missed the opportunity to attend here are the key highlights.

On Grants

There are two main grants that most companies target, ‘Innovate UK’ and the ‘European programme H2020’.

The latter, H2020 is earmarked until 2020 and applications from the UK are still being accepted. Every technology company applying must meet the following criteria:

  1. Technology must be addressing a £1bn market
  2. Technology must be new
  3. Technologies must have disruptive potential

Companies should be mindful that a consortium approach is adopted, to enable regional growth.

It is advisable to consult an expert to handle the process, if designated resources within the company are not available. Depending on the support required in preparing for an application, companies could be expected to pay £2,000-£8,000 for grant writing and a success fee. Success rate sits around 60%.

The process can take 6-12 months, from when applications alongside other documents are lodged, until the funds are received. It is especially important to be aware that payments, in most cases, if successful, will be paid quarterly in arrears after proof of qualifying expenses is provided to the monitoring instruction.

To enable a consistent release of funds, means that the business plan must be very robust, requiring companies to understand their competitive advantage, have a developed technical roadmap and conduct a comprehensive market analysis.

Technologies or sectors that are well funded from other sources, such as venture capital, have less chance of succeeding.

On R&D Tax Credits

R&D is a Corporation Tax (CT) tax relief that may reduce the company’s tax bill. Companies should consider this once an MVP is reached and can claim up to 33% of the total R&D expense for a financial period.

Companies are required to produce two key documents as part of the application process:

A Technical narrative which considers what scientific or technological advance is being sought and the steps of your development process, challenges addressed, including storyline of the R&D work undertaken.

This is matched to the Accounting Report inclusive of the key financial statements and usually a further breakdown of the R&D expenses claimed, which can be incurred anywhere around the world by the UK company.

Employee costs, staff providers, utilities, software, materials and event outsourced R&D expenditure can be included.

With Grant Tree, the process of building a complete case can take up to a couple of weeks on average, and another 4 weeks for funds to be received.

The normal time limit for making your claim is 2 years after the end of a financial period, for the purposes of the Corporation Tax.