Grants are a powerful instrument for stimulating innovation and growth, particularly among small and medium-sized enterprises (SMEs). But what happens when businesses become too dependent on this financial support? Some SMEs seem to rely very heavily on the subsidy drip. They build their business operations around grants instead of developing a sustainable and independent business model. This can lead to a situation in which innovation comes to a standstill as soon as funding disappears.
It is crucial that grants are used as an accelerator for growth. A grant should help companies turn €100 into €150 by growing, innovating and creating positive impact. Unfortunately, some businesses still use grants too often simply as a way to reduce costs, without creating real value or making progress. They balance their budgets with subsidies, and when a grant disappears, they immediately run into trouble.
In recent years, funding authorities have started looking at this more critically and are examining the financial position of applicants more closely. Lessons have been learned through experience.
Responsibility for monitoring this does not lie solely with the funding authority, but also with the funding consultant. A good funding consultant separates the wheat from the chaff and challenges clients to keep moving forward. What does the situation look like after the grant has been awarded? Has a new and better reality been created, or could we already have predicted that the funding would make little positive difference?
Both funding consultants and funding authorities should ensure that public funding reaches companies that genuinely move forward and create impact. Important indicators include entrepreneurship characterised by focus and a clear destination, but also the financial position of the company: are grants being used to plug holes in the budget, or as an accelerator for growth?
By monitoring this carefully, we can ensure together that public funding contributes as effectively as possible to sustainability, innovation and economic growth. As funding and innovation consultants, this is something we care deeply about. Grants remain a powerful instrument.
We are happy to help!
Do you want to create impact with your idea, and does your organisation need that extra push to strengthen an innovation? We are happy to help you determine whether a funding programme can help move your investment forward.
