UKI2S and Innovate UK launch new £10m initiative to accelerate growth of early stage science and engineering companies
The £27m UK Innovation & Science Seed Fund (UKI2S) and Innovate UK (IUK) have launched a joint initiative, the UKI2S Innovate Accelerator. IUK funding of £10m to be used alongside direct equity investment by UKI2S, the new scheme is designed to boost some of the UK’s most exciting young companies.
The UKI2S Innovate Accelerator combines the technology assessment and grant funding capabilities of Innovate UK with equity funding from UKI2S, one of the UK’s leading seed-stage investors. It has been created to help companies accelerate their innovation, product development and intellectual property value faster than could be possible with equity investment alone. The Accelerator is planned to run for an initial two years. Aiming to back around 25 companies across a range of technologies and industry sectors.
Opportunities range from an initial viability study through to the development of advanced engineering prototypes or critical pre-clinical studies for therapeutics. Grant sizes are likely to range from below £100,000 up to £1m for exceptional cases, with matching equity funding from syndicates led by UKI2S. Companies selected by UKI2S from its existing portfolio and its pipeline of potential new investments will be invited to apply for grants from the Accelerator.
This model builds on UKI2S participation in Innovate UK’s successful Investment Accelerator pilot in 2017. UKI2S accounted for a large proportion of the companies funded under the 2017 scheme, and the fund’s proven track record in creating companies and leveraging over £400m private investment made it an obvious choice to continue IUK’s programme of partnering with venture funds.
The initial group of companies, spanning healthcare, energy and smart city technologies, are now embarking on research and expansion projects funded through the new Accelerator. One recipient, Tokamak Energy, is one of the leading private companies racing to deliver energy from nuclear fusion; it recently announced that it had met its initial target of a plasma temperature of 15 million degrees centigrade, hotter than the centre of the sun. The Accelerator funding will enable Tokamak to accelerate the development of improved ultra-high field magnets to contain the plasma and to explore non-energy applications such as manufacturing radio isotopes for medical use.
Dr Andrew Muir of UKI2S said: “Over the past decade we have had an increasingly close working relationship with Innovate UK and we were big supporters of the pilot they ran in 2017, which enabled UKI2S to move faster and with more confidence to help several companies raise funding. The initial response to this partnership from our portfolio companies has been exactly as we hoped and we have seen several companies expand or bring forward their development programmes as a result.”
Tim Sawyer, Chief Investment Officer of Innovate UK, said: “Innovate UK is committed to diversifying its funding offering so companies can access a greater choice of finance products most appropriate to their stage of development. With this Accelerator scheme, we can create a multiplier effect to crowd-forward private sector investment. By working with the investment community right from the start and awarding our funding simultaneously, we can help companies with brilliant ideas to scale and grow with confidence.”
Innovate UK has been working increasingly closely with the UK’s early stage venture funds to leverage equity funding alongside the range of grant support offered by IUK. By the end of 2018/19, Innovate UK committed £16m across the Investment Accelerator portfolio to mobilise £22.5m in equity investments into innovative UK companies.
