4 good practices to get the right funding

Maximizing your chances of obtaining financing is becoming a major challenge for any innovative company. In this context, this article presents 4 best practices to identify and secure financing.

Whether from a technological, marketing or organizational point of view, innovation and R&D are at the heart of the development of nearly 48% of French companies⁽¹). In this regard, the French government, Europe and the various regions of the territory have implemented a large number of financial funds to support companies and maximize the success rate of innovation projects.

The very strong incentive of these public aids has then pushed a very strong demand and thus an increasingly increased selectivity of the companies eligible for these financial devices. Thus, whether you are an SME or a startup, maximizing your chances of obtaining financing is now a major challenge for any innovative company. In this context, I present here 4 best practices in order to identify and secure the best financing for each stage of your projects.

¹ Source INSEE. Published on 02/03/17 -

https://www.insee.fr/fr/statistiques/2569444?sommaire=2587886#graphique-T16F162G2

1 - Identify and quantify your needs

Mobilize and secure the right financingYou need to anticipate financing needs right from the start of your project. Clearly identifying your needs and target objectives, and putting a precise figure on them, will help you to better structure and direct your project. This will also have a beneficial impact on your financing applications:

• First of all, being able to clearly express your objectives and your ambitions within the framework of your project will facilitate the understanding of your project with funding organizations, which will be better able to value and follow it.
• Once the objectives have been established, you will also need to list the resources you will need to achieve them, and therefore establish a provisional budget. This budget is vital for aid applications insofar as grants and other repayable advances are generally quantified as a percentage of the latter. Be careful however to remain as realistic as possible in your budget estimates. Indeed, if a very ambitious budget seems interesting to obtain a more important help, the height of the grants or refundable advances is often indexed on the reality of the engaged expenses.
• Finally, the proposed aid is often limited to the company's own funds. Therefore, adapt your projects and budgets according to the resources you can mobilize.

2 - Structure and phase your project

In addition to the need to structure your project correctly in order to facilitate its management and control its evolution, a good phasing will allow you to see more clearly and toidentify the right moment to mobilize aid according to the stage of your project.

Indeed, in order to limit abuse, one expense cannot be valued by several grants. Also, identifying the right aid for each stage of your project will allow you to better combine the different financing levers in order to take advantage of the great complementarity of the proposed aid.

For example, a feasibility grant will allow you to confirm the validity of your project by financing preliminary R&D work, while a seed loan will allow you to better anticipate fundraising and secure the development of your company.

In addition, do not hesitate to differentiate, within your development, the steps related to R&D and those related to innovation. Indeed, although complementary and difficult to dissociate, these two types of work do not have the same purpose and are not valued in the same way.

Webinar replay: A more detailed presentation of these different financing options is available in the webinar "WHICH PUBLIC FINANCING AT WHICH TIME?"

Likewise, accurate time tracking can be a lifesaver, not only for keeping track of your team's tasks, but also for justifying certain expenses, particularly in the context of research tax credits (CIR) and innovation taxcredits (CII).

3 - Have a good knowledge of the financing mechanisms

The wide range of financing mechanisms and their specificities not only offer a wide choice of financing that can be mobilized, but also multiply their specificities and therefore their complexity.

Thus, having a good knowledge of these systems, or calling on a specialized firm, makes it possible to fluidify the steps to obtain the various financing, to secure them, but also to be able to activate various levers to optimize the systems to the maximum.

For example, recruiting a young doctor will allow you to improve the R&D character of your work. Moreover, the Research Tax Credit will allow you to recover more than 100% of his or her salary during the first two years after hiring. Similarly, using an approved subcontractor will allow you to recover part of their invoice thanks to the CIR or the CII.

In addition, the "1:1" rule must always be kept in mind. Each expense can only be financed by one government grant. For example, obtaining a large grant will greatly reduce the amount of tax credits related to the project.

Finally, a good knowledge of the schemes allows you to take into account the eligibility rates and to better orient your choice towards the schemes to be mobilized. Indeed, if a grant such as the SME Instrument financing 70% of your project seems very attractive, you should not forget that the selection rate for these projects is about 5%.

Thus, it may be worth considering whether the mobilization of significant effort to secure a hard-to-reach supply is better than applying for a repayable advance or a zero-interest loan, which is easier to obtain, although less advantageous.

In view of the large number and diversity of available offers and their complementarity, optimizing and securing the maximum amount of funding becomes an important challenge for innovative companies. A good knowledge of your project, its structure and its differentiating features, as well as of the different mechanisms available, will allow you to take advantage of the different complementarities of the offers and therefore of the available financing. A specialized consulting firm can also assist you in structuring and promoting your projects according to the different funding sources.

4 - Valuing the main eligibility indicators

According to the funding organizations, combining several R&D or innovation indicators increases the eligibility of a project, and therefore the funding that can be mobilized.

For example, the filing of a patent or the publication of a scientific article or thesis are strong indicators of your contribution to the state of the art, and therefore strong R&D indicators. Similarly, the need to involve PhDs, public laboratories or specialized technical centers in the development of your projects strongly highlights the technical nature of your work and the scientific obstacles to be overcome. This reinforces the R&D nature of your projects.

At the same time, winning a competition or receiving an award are strong indicators of innovation that it is important to highlight in order to validate a project's eligibility for funding. The same is true of citations of your products or services in specialized media.

Other methods of validating eligibility include contacting funding bodies directly to obtain an objective opinion on your project and isolate its innovative points. A rescrit fiscal, for example, will ensure that the expenses associated with your project are eligible for the CIR or CII, while contacting a Bpifrance account manager will enable you to obtain a qualified opinion on your project and its eligibility.

To help you better identify the right funding according to the criteria of innovation or research, see my more detailed presentation on the differences between R&D and Innovation. I presented it during a webinar entitled " R&D OR INNOVATION: WHAT IMPACTS ON YOUR DEVELOPMENTS? "

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