17 April 2024

Innovation and knowledge management play a decisive role in companies’ adaptation, growth and success in today’s hypercompetitive environment, with dynamic markets and changing conditions. R&D&I activities are levers in boosting productivity and competitiveness, and are key to facing the digital and green transitions. The role of public grants in R&D&I is vital to achieve additional private investment. The European Union has set an ambitious target of allocating 3% of GDP to R&D&I investment. Therefore, instruments and incentives for R&D&I activities by companies are expected to be further promoted over the coming years. 

Requirements for obtaining public R&D&I funding 

Once the R&D&I project has been identified, its scope, cost and duration must be determined, and clear objectives must be set. This degree of definition is essential, since the project plan and project description must be detailed afterwards in the documents and technical reports requested by the administrations. 

Regardless of the innovative nature of a project, a lack of structure and coherence in the approach may lead to unsuccessful evaluations, resulting in the rejection of public grants. 

Secondly, to obtain R&I grants, it is necessary to make a solid case for the degree of innovation of the project, comparing the current degree of technological development on the market and the technological differentiation provided by the project. Additional project criteria can also be decisive in some calls for proposals, such as the subject or technological field, the budget, and the duration, among others. In these cases, the funding potential of a project will depend on the specific requirements of each call. 

Finally, there are some general requirements in the grants regulatory frameworks, with regulations at the European and national levels, that determine whether a company can be a beneficiary of public grants. These requirements may include limitations according to the economic activities carried out by the company, compliance with the dilatoriness regulations, the company’s financial statements, or being up to date with the payment obligations with the different administrations, among others. 

Therefore, to determine whether a project is eligible for public R&D&I grants, it is essential to scrupulously review compliance with the beneficiary requirements and, secondly, to assess whether the project is clearly defined and incorporates elements of technological innovation. 

The advantages of public funding 

R&D&I projects are often strategic for companies to implement their business plans and ensure business growth. Therefore, many companies are determined to carry out the project regardless of whether they obtain any public grants. Still, public funding has an incentive effect on these activities. 

For example, projects can be accelerated, through a faster implementation or a greater scope. In addition, many calls for proposals offer advances in funding that can help projects get started thanks to the availability of a significant part of the capital needed for the investment. In addition, public funds to carry out the project favour the shortening of the payback period of the R&D investment compared to a scenario without this funding. 

What is more, it is often possible to find mixed grant formulas that include grants and soft loans, the conditions of which are more favourable than the market’s. Likewise, in certain cases, grants may be compatible with other R&D incentives, such as subsidies, the patent box or R&D tax deductions. 

Beyond these economic and financial benefits, obtaining public grants represents a seal of quality for the company and its commitment to R&D, since the calls for proposals are often governed by competitive concurrence. This recognition favours the visibility of the beneficiary’s initiatives and boosts business opportunities and collaboration with third parties. 

Technological risk is rewarded 

R&D&I activities are those that incorporate new technologies, tools, new designs or disruptive processes compared to the techniques commonly used in the market. Depending on the maturity degree of the new technologies (TRL, Technology Readiness Level), several stages of testing and validation may be necessary before the commercial or definitive solution is obtained. These phases are usually successive to bring the product, service or process closer to the end market and range from laboratory-scale tests to prototypes or tests in real environments. 

R&D&I funding instruments usually recognise the effort and risk of innovative activities, with more favourable conditions for activities with higher technological risk and far from the market. Therefore, correct identification of the project’s TRL and a good justification of the degree of novelty and technological maturity are key to maximising the grants or tax benefits for these activities

A project which includes industrial research activities is more likely to be eligible for public funding than an experimental innovation development project. In this way, public administrations encourage economic growth and development based on innovation and the incorporation of new technologies.  

Green and digital futures supported by R&D&I 

The European Union is committed to innovation towards the green and digital transitions which, together with the incorporation of new technologies, favours business competitiveness and improves the global positioning of European companies. To this end, public grant mechanisms aim to co-finance business R&I projects through different administrations. 

Competition for obtaining this grant is usually very high and it is therefore important that the projects are clear, well-defined and aligned with the different calls for grants. In addition, it is essential to ensure compliance with the requirements of the different calls for proposals, both at the project level and to guarantee the eligibility of companies. 

Thanks to public grants, companies can promote their projects with greater economic and financial security, which partially mitigates the risk involved in R&I investment. In addition, they boost opportunities for collaborative development and improve the company’s projection in the market. 

At FI Group, there are specific teams specialised in the different funding programmes, which offer a complete service from the conceptualisation of the idea, the definition of the project, the analysis of the market and the state of the art, all the way to boosting collaborations and coordinating proposals. Therefore, we accompany our clients throughout the life cycle of the projects, from start to finish, with the preparation of funding proposals, interaction with the organisations, management of the files, justification, audits and collections, until the final closure by the administration. 

FI Group has 20 years of experience and wants to guide you on your new growth trajectory. Our experts are at your disposal to analyse how your project fits into the available funding calls and work with you to take the next steps.

Marius Tamus Gamisand 

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