This week the UK’s Technology Strategy Board, run by the government as a booster of the tech business world, unveiled a new £1m fund to support “digital businesses” in the area around Old Street and Shoreditch in east London (‘Silicon Roundabout’ to you and me) which the government has decided to call “TechCity” as a way of ‘branding’ an area which has over the years produced a natural cluster without any government help. Announced by Universities and Science Minister David Willetts, the news has left a number of people confused as to the real down and dirty detail of how it will all work. They could of course read the PDF, but we decided to give them the chance to explain it on TechCrunch Europe. If anyone still has questions they can email the guys running the competion, David.Bott[AT]tsb.gov.uk and/or Nick.Appleyard[AT]tsb.gov.uk
The TechCity LaunchPad is designed to support and extend the cluster that has grown up in the East End of London. Companies will have the opportunity to apply for funding of up to £100,000 for their projects through a competitive process.
The Technology Strategy Board has worked to tailor this opportunity for small and micro companies that often struggle for capital or easy access to finance. We are doing this because we want to help the UK digital and creative industries grow by offering targeted support in the right areas. We know that the UK economy needs more successful creative and digital companies, and that they need to last long enough to go through a growth phase before they are snapped up by larger companies. With so many young and successful businesses in one small area, we see the TechCity as a good place to start.
Successful applicants will be supported in attracting funding to match that provided by the Technology Strategy Board. By being the first to pledge financial support, we hope to make it easier for successful businesses to secure co-funding either from new business partners or from angel or venture capital investors.
In addition to this, we are allowing a 12-month ‘period of grace’, in which companies can find the match funding. There will also be an investors event where companies will be able to pitch in a bid to secure the additional 50% funding. We think that for many companies, we have created an opportunity that de-risks the prospect of applying and running a project.
This is a pilot that may lead to a series of local competitions to support growth clusters across the UK. It was designed through consultation with various members of the London based digital community and uses elements of the competition we ran last year as part of Innovate 2010. Later schemes will look to focus more strongly on other parts of the country and other sectors of activity.
Although companies from anywhere in the UK can apply, with this pilot we are focusing on the Tech City/East London area, and it will be advantageous for business to be able to come and take part in events and activities and to be part of that community and leverage off the community and facilities that exist there.
The TSB traditionally favours investing in collaborative projects as it is seen as the best way to build and create strong industries. However with the LaunchPad we appreciate the size of the grants combined with the early stage nature of many of the businesses means that collaboration is often not an option or even desirable. So even though we believe in the advantages of collaboration, for this scheme we will also be accepting single company applications – which should alleviate the concerns of many entrepreneurs.
1. To enter the first stage of competition all you need to do is submit a two-minute video. This worked well last year because it allows you to present your idea in a cost effective manner and allows us to see both the basis of the idea and the person behind it. It is not intended that you disclose all their intellectual property – the most compelling videos last year described the market and what was wrong with the current offering into it – or the absence of an offering – and promised an innovative solution. The competition would remain open from the beginning from 6th May until 26th – just three weeks.
2. The videos will be posted openly for the wider community to view, make comments on and perhaps even offer support or partnership. Last year, there were some initial worries about the possibility of plagiarism, but we believe a good video pitch will attract support rather than any negative action. However, if this aspect does worry you, we can offer the option of loading as a private video and sending us the key. You will miss out on the community feedback to improve your idea and the potential for accessing other means of support, but it’s your decision. The videos will stay up for two weeks.
3. On the basis of last year’s experience, we anticipate marked oversubscription, so a simple down-selection process is vital. The comments provided by the community will be incorporated into the assessment process, but the assessment at this stage will be carried out by independent assessors, who are all experts in the digital and creative areas. This will take two-three weeks.
4. We will ask those successful in the first assessment to submit what is effectively a short business plan for their project. This proposal will be assessed in the same way as in our normal competitions. Each proposal will be assessed by 3 assessors and rank ordered based on composite score. There are 4 criteria we use – the size of the market, the capability of the company, or companies, to address the market need, the timeliness of the idea and the difference getting financial support from the Government would make to the progress of the idea. These criteria are on our website (www.innovateuk.org). We will allow three weeks for the companies to write their business case, and we expect the assessment to take two-three weeks.
5. As with the majority of Technology Strategy Board support mechanisms, the funding can only be for 50% of the costs of the project. However, a major change from our normal competitions is that the extra funding does not have to have arranged beforehand. The only requirement is that the other 50% is from the private sector. Those successful in this second round will have the offer of a grant up to £100k, dependent on them being able to provide matched funding and they would have up to 12 months to find that funding.
6. To speed up the process of the successful companies finding this extra money, they will all present at a pitchfest organized at a venue in the Tech City area, and we will invite angels, venture capitalists, corporate venturers and others from the private sector who could support by providing the other half of the money.
7. Once the funding is acquired, there is a short due diligence procedure (based on financial status) and then the work can be started. Usually, the money is paid quarterly in arrears, but we can make other arrangements if this is really important.
If this pilot is successful, we might seek to run LaunchPads in other parts of the country (possibly in conjunctions with LEPs and/or Growth Hubs. We might even make it an annual Shoreditch event!
This begs the question, how will we judge success? There are three elements to this. The first is the number of applications we receive. We are looking to connect and support the community, so expect a good response. The second is the assessment scores in the second stage (written) proposal. Since we are using our standard procedures and independent assessors, we can judge the quality against all the other proposals we have received in the digital area over the last couple of years. The third is the speed with which the successful companies get funding. If they are actually still looking after 12 months, I think we will all feel disappointed.
As I said at the start, this is a pilot. We started with ideas from the community, and have tried to respond to some of the feedback we got at the launch last Monday. As with all the Technology Strategy Board does, we are aiming to support companies to be more innovative – and therefore more successful. Are you up for it?