If your business has been planning to apply for an Innovate UK Smart Grant, you may be wondering what’s next. With the programme paused from January 2025, uncertainty is in the air—but so are new opportunities.

We know that innovation doesn’t stop, and neither should your funding strategy. While this pause might feel like a setback, it’s actually a chance to refocus your approach, explore alternative funding routes, and prepare for the next wave of grant opportunities.

We break down the key changes and what you can do to stay funding-ready.

Why Have Innovate UK Smart Grants Been Paused?

While Innovate UK hasn’t given a definitive reason for the pause, there are strong indications that it’s part of a strategic realignment. Innovate UK Smart Grants have long been a key tool in the UK’s innovation funding landscape, but with just 2% of applications securing funding in the last round, the competition has become intense.

Several key factors are likely at play:

1. A More Targeted Approach – Future funding may prioritise high-impact areas like net zero, digital transformation, and advanced manufacturing, rather than broad open calls with a one-size-fits-all approach.
2. Process Streamlining – There’s a push to reduce bureaucracy and improve efficiency, ensuring faster, outcome-driven funding. This should benefit both applicants and the grant funders.
3. Alignment with National Strategy – With the change of Government from Conservative to Labor, the UK’s Industrial Strategy 2035 and UKRI Strategic Plan 2022-27 all at play, it’s likely funding will be more focused on national priorities, influencing how grants are structured in the future.

What does this mean for your business?

Chloe Sharp, Grant Advisor for MPA suggests to expect future funding rounds to be more specialised, with clearer priorities and tighter eligibility criteria. They are likely to seek measurable impact, collaboration between sectors and include faster decision making throughout the submission process.

“We anticipate this to be a positive change considering that Innovate Smart Grants have become inaccessible to SMEs and Startups – we often advise this particular Grant competition as a “last resort” because it’s so competitive. Only 44 projects got funded in the previous Smart Grant round, with over 2,100 applications being submitted and nearly 1,700 being assessed. The success rate is lowering every round, with the latest at 2% – the lowest yet.

The high application rate indicates that there is a need for open competitions, rather than only having themed, targeted competitions available. We’ll have to wait and see what happens. But for those companies that are seeking innovation funding via Smart Grants may face temporary uncertainty and will need to realign their funding proposals to match the new, more targeted criteria once the updated approach is rolled out and grants available in the interim.”

How Will The Smart Grants Pause Affect Businesses Planning to Apply?

For businesses that were preparing a Smart Grant application, this Innovate UK Smart Grant pause means:

Short-term disruption – Without a Smart Grant competition open, immediate funding plans may need adjusting.

A need for flexibility – Businesses should pivot to alternative grant funding options while awaiting new grant announcements. Or look at other innovation funding options.

Changes to funding timelines – More information on new grant structures is expected in Spring 2025, with competitions likely reopening by Summer 2025.

The best strategy? Stay proactive. Rather than waiting for updates, now is the time to explore other funding routes.

What Alternative Innovation Grant Options Are Available?

While Smart Grants are on hold, there are still plenty of funding opportunities for innovative businesses. Here are some key options to consider:

1. UKRI Challenge Funds

Focused on national challenges such as AI, clean energy, and life sciences, these funds align with government priorities and can provide targeted support.
Find out more: UKRI Challenge Fund

2. Regional Growth Funds

Many local growth hubs offer funding to businesses working on innovation and economic development.
Check your local opportunities: Growth Hub Finder

3. Sector-Specific Grants

Grants from industry bodies, local councils, and specialist funding initiatives often support niche innovation areas.
Explore available grants: Business Connect Grant Finder

4. UKRI Funding Streams

UKRI offers multiple funding options for early-stage and applied research beyond Smart Grants.
Browse opportunities: UKRI Funding Finder

In addition, Innovate UK provides non-grant support such as:

✅ Business Growth & Startup Support
✅ Innovation Networks through Business Connect
✅ No Limits Programme for scaling businesses

What Changes Could Smart Grants See in 2025?

When Smart Grants return, they may look very different. Based on industry trends and past challenges, we expect potential improvements such as:

A Simplified Application Process – Reducing the 80-100 hours typically required to write a full Smart Grant application. This time burden is sometimes a significant barrier for SMEs and Start-ups as there is not enough resources to free up for writing a submission.

Clearer Match Funding Guidelines – One aspect of grant funding that can confuse grant applications is match funding, firstly what are sources of match funding that would be eligible and secondly, how this impacts which ‘workstream’ they enter. Addressing confusion around grant thresholds and eligible contributions is needed.

More Transparency & Communication – Improving clarity on assessment criteria, processes and funding timelines.

Better Intellectual Property (IP) Guidance – Helping businesses protect and manage IP within collaborations. There could be better guidance on navigating these discussions pre and post-project.

Outcome-Based Funding Models – Similar to tender processes, grants could introduce structured milestones for project delivery. This would shift towards funding based on measurable impact, tangible results and accountability.

These changes would not only address some of the criticisms of Smart Grants but provide a focused and effective support mechanism for innovation in line with national strategic priorities.

How Can You Stay Competitive in This Transition?

To make sure your business remains funding-ready whilst Smart Grants are paused, consider these key actions:

1. Diversify Your Funding Sources – Apply for multiple funding sources rather than relying on a single programme. There are other forms of funding outside of Grants such as tax efficient funding options; R&D Tax Credits, Patent Box, EIS/SEIS and more.
2. Refine Your Grant Applications – Use this time to strengthen your proposals, ensuring they align with emerging priorities like net zero and digital transformation.
3. Build Strategic Partnerships – Many future grants may favour collaborations, so start networking with academics, industry bodies, and innovation hubs.
4. Review your Grant Strategy: We believe in utilising grants as part of a strategy, this could be a useful time to reflect on your grant strategy and consider what you want to be grant funded in the future once the new competitions are released so you’re ready to apply.
5. Stay Informed & Agile – Keep an eye on Innovate UK and UKRI announcements for Spring 2025 update.
6. Work with Experts – MPA’s team can help you navigate funding changes, write winning grant applications, and future-proof your innovation strategy.

Let’s Make Your Innovation Funding Future-Proof

While the Smart Grant pause brings change, it also brings opportunity. The businesses that succeed will be those that plan ahead, explore new funding routes, and position themselves for the next phase of innovation finance.

We’re here to help. Sometimes it’s easier to chat, our experts can talk you through your options and help you strategically prepare for future competitions.

Contact us today to future-proof your funding approach.