The biggest announcement was the much-delayed replacement to the smart grant: The Growth Catalyst: New Innovators Competition. This new competition provides £10 million in funding for early-stage UK tech start-ups to bring their breakthrough technologies to market and develop into high-growth, scalable businesses. This is the first early-stage grant launched by Innovate UK in 2025 which has begun to address many of the shortcomings of smart grant whose demise although a blow to start-ups was much needed change to stimulate the funding landscape.  

This article considers the implications of Labour’s newly emerging R&D tech grants, the issues of the former smart grant scheme, and offers some predications as to what other future funding opportunities might look like.  

 

Government commits £86b to R&D  

In its recent Spending Review, the Labour government announced an £86 billion investment in Research and Development (R&D) over four years aimed at accelerating growth in priority innovation sectors such as life sciences, green technology, advanced manufacturing, and AI software. This has alleviated fears surrounding Chancellor Rachel Reeve’s demands that all government departments must deliver 5% efficiency savings will further reduce the competitiveness of UK innovation.  

With a substantial funding package set to exceed £22.5 billion annually by 2029/2030, this is a vital boost that will help strengthen the UK’s position as a global leader in research and innovation, as it has continuously lagged behind competitor nations including the United States, Germany, China, and South Korea over the last few years. 

The government’s renewed commitment to R&D investment represents a major turning point for the previously sparse and underfunded UK grant landscape, re-opening the door for tech businesses—particularly in high-growth and deep-tech sectors—to access meaningful public funding. 

 

Absence & flaws in the IUK Smart Grant 

A number of significant flaws within the former Innovate UK Smart Grant, alongside broader policy and technological shifts, contributed to its eventual cancellation: 

 

Extremely low success rates  

Reports indicate as few as 2-3% of applications—even strong ones—being successful in securing capital in the last two years of the scheme.  

 

High application volumes  

The final round alone saw a total of 2,134 applications submitted with 1,676 moving to the assessment stage, yet only 44 received awards indicating that the scheme had become an oversubscribed and largely inaccessible funding route. 

 

Unsustainable resource demands  

SMEs need between 80 to 100 hours to prepare a single SMART application; a huge time and resource delay for already overworked start-ups. Many early-stage companies also lacked the internal capacity to manage such an intensive process.  

 

Reduced funding pot  

In 2024, the funding amount dropped from £25 million to £15 million, further reducing the number of winning applications.  

 

Impact of Artificial Intelligence 

The growing use of AI in grant writing has meant that, in the absence of human oversight to draft responses, it has compromised the quality submitted. When used to generate complete grant applications, the result is often a generic script overly reliant on jargon and buzzword phrases such as ‘innovative’, ‘game-changing’, and ‘market-leading’. AI also lacks the same commitment to the project’s success as a trained consultant or team member, often failing to learn and put in place best practices in its responses, such as using case studies, real-world examples, and relevant statistics and data – essential to persuasive writing.  

 

The Growth Catalyst: New Innovators Competition  

On 7th July 2025, Innovate UK announced the Growth Catalyst, the first of the promised replacement funds to the smart grant. This marks the beginning of a broader overhaul of UK grant funding to align closely with the Labour government’s commitment to deliver on its manifesto goals of socioeconomic growth, regional levelling up strategies, and more financial support for the UK tech sector.  

The Growth Catalyst brings together public financial backing and tailored business development support through Innovate UK’s Business Growth services. Early-stage startups will gain access to expert mentorship and strategic guidance alongside their funding, providing advice on the next stages of business development. The grant is designed for the earliest-stage applicants, helping them transform their idea into a Proof of Concept (PoC) that can accelerate their journey toward commercialisation. 

Each successful applicant can access between £25,000 and £50,000, covering 100% of eligible project costs. The applicant will receive the funds in three phases: 70% at the start of the project, 20% after they have submitted evidence of how they will spend it, and the final 10% at the end of the project. All projects must begin on 1st November 2025 and run for three to six months, concluding no later than 30th April 2026. 

This Growth Catalyst targets projects that fall into or more of the UK government’s five priority technology areas: 

• Artificial Intelligence (AI) and Machine Learning (ML): This includes the development of novel AI tools, as well as advancements in ethical, trusted, and responsible AI. 

• Semiconductors: Projects may focus on UK-led breakthroughs in chip design, advanced materials, or next-generation manufacturing techniques. 

• Next-generation telecommunications and connectivity: Areas of interest include photonic technologies, open and interoperable network solutions, and secure or quantum-resilient communication systems. 

• Quantum technologies:  Quantum computing, hybrid quantum-classical algorithms, and real-world applications of quantum systems. 

• Engineering biology: Inventions in synthetic biology, advanced bioengineering platforms, and sustainable biomanufacturing methods 

Applicants should align their projects closely with one of these targeted sectors and clearly highlight within their applications market traction, commercialisation pathways, and the potential societal and environmental benefits of their technology.  

 

Predictions for Smart Replacement 

By reflecting on the core challenges within the Smart Grant and the launch of Growth Catalyst we can make some reasonable predictions about what type of grants are coming next: 

 

Targeted funding calls  

Instead of continuing with the broad, open-call model used by the Smart Grant, the new scheme may focus on specific, high-impact sectors such as net zero, digital transformation, sustainable technologies, green energy, maritime, and, of course, artificial intelligence. The benefits of this approach are more grants for high-priority, targeted industries that stand to contribute significantly to UK economic growth and global competitiveness.  

 

Regional grants  

The IUK Smart Grant faced frequent criticism for disproportionately awarding funds to businesses based in London and the South East—over 253 awards were made in that region between November 2024 and 2025 alone. This led to accusations that the scheme reinforced existing socioeconomic inequalities between the North and South with Northern start-ups being much less likely to receive investment. Any replacement programme will need to address this imbalance by ensuring support reaches the UK’s rapidly growing urban tech start-up hubs in cities such as Liverpool, Glasgow, Manchester, Newcastle, and Leeds.