Artificial Intelligence and Machine Learning
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Geographical focus: the United Kingdom
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Geo-specific
“You’re wondering if I should just spend it on a place to stay in America for a week”
Revisions to the UK government’s research funding guidelines and their complex application pose a challenge for start-up technology companies, experts told a parliamentary committee inquiry on Tuesday.
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Tax breaks intended to spur innovation and help businesses overcome challenges allow businesses to claim up to 20% of research and development. Businesses can also apply for a grant of up to £2 million under the Innovate in the UK program.
Revisions to tax break criteria hamper growth, tech experts say testified before the Communications and Digital Committee.
“We definitely had issues,” said Peadar Coyle, founder of AudioStack. “Given the changes to the system several times over the past few years, from a cash flow management perspective, it has been difficult.”
Victor Riparbelli, CEO of AI video generation company Synthesia, acknowledged that the Innovate UK grant played a vital role in helping businesses stay afloat from the start until they secured larger investment.
“The role that the Innovate fund has played is that we have been able to secure funding when no one else could and that is exactly what these grants should focus on. It should be focused on start-up companies because the capital markets won’t necessarily do that. ” he said.
But the lengthy grant application process poses a challenge for start-ups seeking timely funding, said Simon Barratt, CEO of Cooperative Innovations, a gaming company.
“In the beginning, when it’s really hard, with the amount of time you put into it, you wonder, ‘Should I just spend it on somewhere to stay in America for a week to raise money,’” Barratt said .
The difficulty in raising seed money has a lot to do with the fact that British venture capital firms are more risk-averse than their American counterparts, Riparbelli explained.
“If you compare the UK startup funding ecosystem with that of Silicon Valley, there is a mentality in the UK that is more risk averse. In the US it’s more about size that we can achieve,” added Riparbelli.