Few tools measuring a concept’s developmental process have proved to be as successful as the KTH Innovation Readiness Level™. Established by Sweden’s KTH Royal Institute of Technology, this model employs a measure of ‘readiness’ across six different criteria – ‘customer’, ‘technology’, ‘business model’, ‘IPR’, ‘team’, and ‘funding’ – to provide users with a fair and visual representation of their innovation’s progress.
The KTH Innovation Readiness Level works by giving these six criteria a ‘score’ between 1 and 9 (1 being the least developed). This can be done by looking through the milestones and checkpoints associated with each level and finding the one that best describes your project’s status.
Often, academic innovators mistakenly focus their efforts on just a single element of this tool – the Technology Readiness Level (TRL). Whilst this is key in helping users develop and test their innovation from a purely technological perspective, there’s a lot more that goes into making an idea market-ready.
For this reason, we will now explore the concept of Funding Readiness, an often-overlooked element of the KTH Innovation Readiness framework that guides its users on their journey to secure the necessary funding to take their idea to market.
What is the Funding Readiness Level?
The starting point for FRL, i.e. FRL 1, describes a reality faced by innovators far and wide throughout the early stages of their project’s development, wherein a somewhat unclear initial business idea is in place and not much is known about the project’s funding needs and options.
Over time, this scale seeks to take users all the way to FRL 9, which describes a situation wherein vital investment has been obtained and ‘additional investment needs and options are continuously considered’.
Doing so, however, requires users to put in plenty of time and effort in working on their pitch deck, developing a concrete business plan, creating a unified team, and keeping tabs on all necessary documentation, amongst other things. Over time, this will see the innovation climb the ranks of the Funding Readiness Level.
With that being said, here’s a representation of all nine levels in the FRL scale:
The text for this graphic was adapted from The KTH Innovation Readiness Level™ Model.
Where do I fall on the Funding Readiness Level Scale?
Once a solid understanding of funding readiness is obtained, the next step is to identify where you and your project fall on the FRL scale.
Being aware of the Funding Readiness Level of your research project, spin-off or startup company allows you to focus your efforts on those areas which may be lacking, thus paving a clear path to moving further up the scale and obtaining the necessary funding.
One way of identifying where you stand in terms of funding readiness is by creating a checklist that clearly lists the key funding-related milestones that one needs to reach.
The following questions are here to help you gauge which key elements of funding readiness require more attention, to take your project or business forward. After going through the below questions, feel free to take another look at the FRL scale above to confidently define your project’s Funding Readiness Level.
How can I improve my Funding Readiness Level?
In the unlikely event that you’re already at FRL 9 (in which case, congratulations!), you might want to consider adopting a number of good practices which will both directly and indirectly help you on your journey to the top of the Funding Readiness Level.
Think like an investor
Developing a pitch or presentation for the first time may prove to be rather challenging – mainly because the content that interests potential investors is entirely different to what might interest a research collaborator or colleague.
In order to impress investors, it is of paramount importance that you understand what it is that they’re looking for. First and foremost, confirm that the project at hand falls within the investor’s investment mandate and try to gauge why said investor might be interested in investing in your idea.
Once you secure an investor’s interest, keep negotiations somewhat flexible, so that the prospective deal serves to benefit both parties.
As exciting as it might be to approach the first investor that expresses interest in your idea, it is key to keep your options open and gauge what other interested parties can bring to the table. This can give you some leverage when negotiating a deal.
Brush up on your pitching skills
You might be working on a downright revolutionary project that can positively impact people’s lives for years to come – but if you can’t successfully communicate that value to interested parties, getting your project on its feet will prove to be an unnecessarily long and arduous feat.
When pitching to investors, the years of hard work you’ve put into your project will be condensed into a handful of slides and a quick oral pitch, so it’s vital that you make the most out of the given time and resources.
Get extremely familiar with your pitch deck, so much so that you can deliver your presentation without relying on your written notes. It’s also beneficial to include graphics within your presentation in a bid to keep your audience engaged and demonstrate your concepts in a visual manner.
Given the extreme time constraints that often come with pitching your project, it’s best to have a maximum of two representatives present.
Get comfortable with delegating work
It’s easy to get caught up in your company / research project’s day-to-day operations. Doing so exclusively, however, will prevent you from working on your project and developing it further from a strategic standpoint.
An essential part of growing your project is bringing in a team of hardworking individuals who you can trust with handling day-to-day matters. Not only will this benefit you down the line, when you’re required to create a concrete corporate structure, but it will also free up precious time which can be used to move the project forward.
Use this time to focus on business development, work on your project’s value proposition, and practice your pitching skills.
Prepare for the due diligence check
In touch with an interested investor? That’s great news! Chances are you’re within arm’s reach of securing some well-deserved funding – but it’s not over yet.
Before going through with an investment, investors tend to perform a due diligence check, through which they confirm that the research project / company at hand is, in fact, compliant and capable of following through with its promises.
Provided that the necessary checks and balances were employed and maintained throughout the project’s lifetime, this final hurdle shouldn’t be particularly concerning, although there are a few things you can do to make this process as smooth-sailing as possible.
- Keep key documents, such as annual financial statements, handy at all times, so that you can present them at a moment’s notice.
- Make sure that your management team is experienced and capable of leading your employees.
- Make sure the project can handle the forecasted expansion.
What funding opportunities can I benefit from?
Whether you’re in the early stages of your research project or looking to get it up on its feet, funding is bound to be on your mind. Luckily, there’s no shortage of funding options out there – the trick is choosing the source that best suits your project.
The two main types of funding available are public and private funding. As the names suggest, public refers to funding stemming from public agencies, such as the European Union or national governments, whilst private funding is typically awarded by corporate entities or high net-worth individuals.
Public Funding
A substantial portion of public funding available for research projects / companies around the EU falls under the European Innovation Council (EIC). Established under the EU Horizon Europe programme, the EIC has a budget of €10.1 billion devoted solely to supporting ‘game changing innovations through the lifecycle’.
In turn, the EIC is home to a variety of funds developed with the intention of benefitting a number of niches within the bloc’s startup and research ecosystems.
EIC Pathfinder
The EIC’s Pathfinder programme is dedicated towards supporting radically new technologies that may lead to significant technological breakthroughs.
This fund is typically sought after by research organisations, high-tech SMEs, scientists, and entrepreneurial researchers from educational institutes, amongst others.
Successful applicants may receive grants of up to €3-4 million for the early-stage development of future technologies up to proof of concept.
Click here to learn more about the EIC Pathfinder programme.
EIC Transition
Unlike EIC Pathfinder, this fund shifts its focus from the early development of new technologies to the maturation and validation of said technologies as well as the development of a business case.
Generally, this fund is sought after by startups and research projects that have a solid basis to their technologies and are now looking to prove its value in relevant application environments whilst gearing up towards future commercialisation.
Successful applicants may receive grants of up to €2.5 million to ‘demonstrate technology in application-related environment and develop market readiness.
Click here to learn more about the EIC Transition programme.
EIC Accelerator
The EIC Accelerator is aimed towards individual SMEs – with a particular focus on startups and spinout companies – in a bid to support the development and scaling-up of innovations.
Successful applicants receive a range of benefits including, of course, financial support. This comes in the form of a non-dilutive grant funding of up to €2.5 million (for innovation development costs) and direct equity investments of up to €15 million for scale up and other costs.
Selected companies also receive coaching, mentoring, and access to investors and corporates.
Click here to learn more about the EIC Accelerator programme.
Cascade Funding
First introduced by the European Commission in Horizon 2020, Cascade Funding is a mechanism focused on distributing public funding in a bid to benefit SMEs, start-ups, and scale-ups in their development of digital innovation.
Cascade Funding is set apart by its light, relatively ‘SME-friendly’ application process which allows projects benefitting from EU funding to issue open calls for further funding.
Companies such as Sploro have specialised in this field by taking on the roles of ‘grant managers’, wherein they focus on further facilitating the process of cascade funding whilst helping start-ups and SMEs promote their open calls.
Private Funding
Generally, private funding can prove to be somewhat more straightforward than public funding, in that the proposal pools tend to be smaller, and investors can afford to give more of their time to your organisation or research project.
With that being said, the funds awarded by private entities do tend to be smaller than those offered by public counterparts.
There are several different types of private funding, so it is key to apply for the right type of funding when it is most beneficial for your project.
Incubator Programmes
Oftentimes offered by dedicated business incubators, incubator programmes seek to help startups and research projects develop their organisations by offering a range of services.
These can include anything from training to a dedicated office space, with some incubator programmes going as far as offering participating projects venture capital financing at the end of said programme.
Angel Investors
An angel investor is a high-net-worth individual who financially backs startups or research projects. This is often done in exchange for ownership equity in said company.
Generally, angel investors tend to make one-time investments during startups’ early stages in a bid to help them get off the ground.
Venture Capitalists
Venture capitalists (VCs) are serial investors who traditionally target up-and-coming companies deemed to have high growth potential in exchange for equity.
VCs tend to make their investments throughout the later growth stages of startups, i.e. when their focus is shifted towards market readiness and expansion.
Feeling stuck?
Finding and securing the right funding for your research project is no easy feat. Luckily, this happens to be one of our areas of expertise here at Acceler8 Venture Builder.
With years of experience in helping startups and research projects take their ideas to market under our belt, we’re more than qualified to help you wade through the funding ecosystem.
So, if you and your project are looking to identify private, public, or hybrid sources of funding or just need that extra push to secure said funding, drop us a message to book a free consultation session and visit our cases page to learn more about our successful projects.
We’re also currently running the Venture Alliances programme – a Europe-wide project looking to create joint ventures between 100 researchers and business. Head to venturealliances.eu to see how this programme can benefit you and register your interest whilst spaces last.
