Securing the right kind of finance to fund your innovation project can be key to its success. There are many ways to fund innovation, depending on whether you are:
- starting up
- growing your business
- using your own funds
- seeking external funding, such as loans or equity finance
If you're trying to access external funding, you will need a solid business plan that describes your business and sets out detailed forecasts of where it is going. See how to write a business plan: step-by-step.
Bank finance for innovation
Businesses often turn to their banks for overdrafts or loans for additional finance, depending on their borrowing needs. But banks are often reluctant to lend money to innovation start-up businesses - especially if you have no significant tangible assets such as premises and equipment. Read more about bank finance.
Equity finance for innovation
If you're willing to relinquish some control of your business to external investors, such as business angels or venture capital firms, you could consider using equity finance.
Investors in start-up ventures will usually expect a return on their investment after between five to seven years after investment. This is usually achieved by selling either the entire business or just the investors' shares in it so that they can realise the value of their investment. See exit strategies for innovation start-ups.
You may also consider seed venture funds - locally based funds, often linked with regional strategies - or unsecured loans, for example from family or friends. See more on financing from friends and family.
There is a wide range of grants available to support innovation, backed by a variety of sources, including the government, the European Union, local authorities and academic institutions.
If you need external expertise to help with an innovation project, you may want to consider applying for Invest Northern Ireland Innovation Vouchers. The vouchers are worth up to £5000 and allow you to access skills and expertise from one of the 39 registered knowledge providers (eg universities and colleges) through the island of Ireland.
Typical projects include:
- developing ideas for new or improved products, processes and services
- product and service testing and validation
- access to information and expertise on new materials
- access to research and scientific expertise
In the video below, Ian Hawthorne - the owner of Hawthorne Crafts - explains how his business benefited from an Innovation Voucher.