Grants for SMEs in UK life sciences: what CFOs need to know

Grants for SMEs in biotech and life sciences have become a critical part of the UK funding mix. For CFOs, they are no longer opportunistic wins, but strategic tools that shape runway, dilution and clinical or regulatory timelines.

Introduction

What are grants for SMEs in life sciences

In the UK context, grants for SMEs in life sciences are competitive, non dilutive awards that support:

• Early translational research and proof of concept

• Clinical and regulatory development of new therapies, devices and diagnostics

• Digital health, data and AI technologies for the NHS and global markets

• Scale up of manufacturing and supply chains for medicines and medtech

Most schemes are designed to de risk innovation that is too early or too uncertain for conventional equity or debt, while building capabilities the UK wants to anchor domestically.

Key life sciences grants for SMEs in 2024–2025

Over the last 12 to 18 months, several programmes have been particularly important for UK biotech and life sciences SMEs.

Innovate UK Biomedical Catalyst

Innovate UK’s Biomedical Catalyst remains the flagship grant for life sciences SMEs, helping them test and develop innovative health and care solutions, from therapeutics and medical devices to digital health.

Recent industry led rounds have offered UK registered SMEs a share of up to £15 million to develop pre market R&D projects that address defined health challenges.

For CFOs this is often the central instrument for:

• Bridging from preclinical data to Phase I or first in human

• De risking platform technologies before large equity rounds

• Co funding collaborations with larger industry partners or the NHS

NIHR Invention for Innovation (i4i)

The National Institute for Health and Care Research (NIHR) Invention for Innovation (i4i) programme provides translational R&D funding for medical devices, in vitro diagnostics and digital health technologies that address NHS needs.

Within i4i, the Connect calls are particularly relevant to SMEs, offering up to roughly £150,000 over 12 months to help companies reach the point where they can secure larger awards or private investment.

i4i tends to suit SMEs that:

• Are building regulated products with clear clinical pathways

• Need structured evidence generation rather than exploratory science

• Aim explicitly at NHS adoption and reimbursement

SBRI Healthcare

The Small Business Research Initiative (SBRI) Healthcare programme funds SMEs to develop innovations that tackle unmet needs in the NHS, funded by the Accelerated Access Collaborative.

Competitions in 2024 have focused on themes such as:

• Stroke

• Urgent and emergency care

• Antimicrobial resistance

• Women’s health

• Cancer and net zero NHS priorities

SBRI Healthcare awards are particularly attractive because they:

• Provide 100 per cent funded development contracts for SMEs

• Offer a clear route into NHS test beds and procurement conversations

• Allow projects to be framed as real world problem solving rather than pure research

Life and Health Sciences Launchpad, Northern Ireland

The Northern Ireland Life and Health Sciences Launchpad is a regional Innovate UK fund, currently £7.5 million, ringfenced for life and health sciences projects in the Northern Ireland cluster.

For UK registered SMEs active in that cluster, Launchpad rounds have offered:

• Single company grants between £25,000 and £100,000

• Collaborative R&D grants between £150,000 and £1 million

• Support for areas such as diagnostics, medtech, digital health and precision medicine

This is a good illustration of a broader trend towards geographically focused “cluster” funds that combine grants, mentoring and ecosystem building.

Life Sciences Innovative Manufacturing Fund (LSIMF)

The Life Sciences Innovative Manufacturing Fund (LSIMF) is a capital grant scheme that aims to expand UK life sciences manufacturing capability, providing up to £520 million in grants over 2025 to 2030 for human medicines and medtech manufacturing projects.

While LSIMF is not exclusively for SMEs, growing biotech and medtech manufacturers can use it to:

• Co fund new facilities or significant upgrades

• Anchor high value manufacturing and fill supply chain gaps

• Align manufacturing strategy with national resilience priorities

Horizon Europe health calls

Since the UK re associated to Horizon Europe, UK organisations, including SMEs, can participate fully in the EU’s €95.5 billion research and innovation programme, with Work Programme 2024 calls covered by association.

Within Cluster 1: Health, there are multi country calls that fund collaborative projects on prevention, diagnostics, therapeutics, health data and health systems innovation.

For UK life sciences SMEs this offers:

• Larger, multi year collaborative grants

• Access to European clinical and research networks

• Strategic positioning for later commercial partnerships

How grants for SMEs typically work in life sciences

While each scheme has its own rules, the process for grants for SMEs in biotech and life sciences usually follows a similar pattern.

1. Call publication and theme definition
   Funder defines priority areas such as AMR, oncology, digital health or manufacturing resilience.

2. Outline concept and internal go or no go
   CFO and R&D leadership test alignment with strategy, capital plan and regulatory pathway.

3. Consortium building and partner alignment
   For collaborative calls, SMEs identify academic, NHS or industry partners and agree IP and data terms.

4. Full proposal and budget development
   Work packages, milestones, staffing, subcontractors and match funding are specified, with clear exploitation plans.

5. Assessment and funding decision
   Proposals are scored on scientific merit, commercial potential, team strength and fit with policy objectives.

6. Contracting, delivery and reporting
   Successful SMEs enter a grant agreement with detailed reporting, audit and outcome requirements.

The critical point for CFOs is that grant agreements create binding financial and reporting obligations that persist well beyond the initial award letter.

Eligibility highlights for biotech and life sciences SMEs

Although details vary, common eligibility patterns include:

• UK registration as a micro, small or medium sized enterprise

• Activity in defined life sciences domains, for example therapeutics, medtech, diagnostics or digital health

• Clear innovation content, normally beyond routine development

• Projects starting within a specified window and completing within 6 to 36 months

• Ability to demonstrate future commercial potential or NHS adoption

Illustrative examples

Scheme

Typical SME role

Project size (indicative)

Focus

Biomedical Catalyst

Lead applicant or partner

Hundreds of thousands to low millions

Pre market health and care innovation

NIHR i4i Connect

Lead SME

Up to c. £150k over 12 months

De risking medtech and digital health for NHS adoption

SBRI Healthcare

Lead SME supplier

Phase 1 c. £100k, Phase 2 higher

Solutions to specific NHS unmet needs

NI Launchpad

Lead SME in NI cluster

£25k to £100k MFA, up to £1m CR&D

Life and health sciences cluster growth

Funding scope and strategic benefits

For CFOs, the appeal of these grants lies in their scope and capital impact. Typical eligible costs include:

• Salaries for scientists, clinicians, regulatory and project staff

• Consumables, lab time and specialist equipment usage

• Subcontracted clinical, regulatory or technical services

• In some schemes, capital spend on manufacturing and infrastructure

The strategic benefits include:

• Runway extension without equity dilution

• Signal value through endorsements from Innovate UK, NIHR, the NHS or European funders

• Structured evidence generation to support later pricing, reimbursement and partnering

• Improved investor conversations, since external validation and co funding reduce perceived risk

Market context: a strong but competitive landscape

Recent moves such as the LSIMF, the Northern Ireland Launchpad and renewed access to Horizon Europe sit within a wider UK industrial agenda that positions life sciences as a strategic sector, including commitments to health data infrastructure and R&D investment.

At the same time, programmes such as SBRI Healthcare are explicitly mandated to double investment and support SME led innovation for the NHS, reinforcing the focus on smaller, agile companies as engines of health innovation.

The result is an ecosystem where:

• Competition for high profile calls is intense

• Funders are tightening expectations on evidence, EDI and environmental impact

• Cross border collaboration is increasingly important, particularly via Horizon Europe

FI Group insight on grants for SMEs in life sciences

Consultancy FI Group works with biotech, medtech and digital health SMEs to navigate this grants landscape alongside other innovation incentives. Drawing on teams across the UK, Europe and the United States, FI Group helps companies:

• Map upcoming grants for SMEs against clinical, regulatory and commercial roadmaps

• Decide when to pursue schemes such as Biomedical Catalyst, i4i, SBRI Healthcare, Launchpads or Horizon Europe calls, and when to focus on private capital instead

• Coordinate grant funding with R&D tax relief and other instruments, so that projects are structured within subsidy rules and do not inadvertently reduce overall support

• Design evidence and reporting frameworks that satisfy both funders and internal audit, reducing the risk of clawback or reputational damage

Many CFOs in life sciences use funding advisers’ guidance from FI Group to benchmark their current grants strategy and to decide whether internal teams or external specialists should lead on particular competitions.

Application process and practical steps for CFOs

For a biotech or life sciences SME, a disciplined approach helps control workload and risk. Practical steps include:

1. Create a rolling grants pipeline
   Track key schemes relevant to your stage and modality, including recurring calls in Biomedical Catalyst, i4i and SBRI Healthcare, plus cluster specific offers.

2. Define internal “go or no go” rules
   Agree thresholds for project size, strategic fit and match funding before bids are developed.

3. Align grants with the capital plan
   Model how each grant interacts with equity rounds, venture debt and manufacturing or clinical investment.

4. Integrate with tax and legal functions
   Assess interactions with R&D tax relief, IP strategy and subsidy control before submission, not after award.

5. Resource post award delivery explicitly
   Budget for project management, finance support and data collection as part of the grant, rather than trying to absorb these costs into business as usual.

Common CFO challenges and how to mitigate them

• Fragmented portfolio
  Too many small grants create administrative burden. Mitigation: set a minimum project size or strategic importance threshold.

• Underestimated match funding
  Co funding commitments can strain cash. Mitigation: stress test scenarios and treat match funding like any other capital commitment.

• Misaligned clinical and financial milestones
  Trial timelines slip while grant schedules remain fixed. Mitigation: build contingency into plans and push back on unrealistic assumptions at proposal stage.

• Multiple overlapping audits
  Different funders demand similar evidence in different formats. Mitigation: design a single underlying evidence architecture that can populate multiple templates.

• Incoherent incentives strategy
  Grants, R&D tax relief and other subsidies are pursued independently. Mitigation: appoint clear internal ownership and, where appropriate, use external advisers to harmonise approach.

FAQs on grants for SMEs in biotech and life sciences

Before committing to a more structured grants strategy, CFOs and founders often ask similar questions.

Are grants for SMEs still worth the effort compared with equity?

Yes, provided projects are material and strategically important. Grants for SMEs in life sciences are non dilutive and can significantly de risk clinical or technical milestones that would otherwise need to be funded from precious equity. The key is to be selective, not to chase every opportunity.

Which schemes should a very early stage biotech SME consider first?

Pre seed and seed stage biotech SMEs often start with Biomedical Catalyst feasibility or early stage awards, i4i Connect style translational calls for device and digital concepts, or SBRI Healthcare phase 1 competitions focused on problem discovery and prototyping. These programmes are designed to support early evidence and de risk future investment.

How do grants interact with R&D tax relief for life sciences companies?

Interaction rules are complex. In broad terms, notified state aid grants can restrict which costs are eligible for SME R&D relief, although RDEC style relief may still be available on some expenditure. It is important to design project and cost allocation with both grant and tax rules in mind to maximise overall support without breaching subsidy limits.

Should SMEs build internal bid teams or rely on external consultants?

It depends on scale and pipeline. SMEs with a steady stream of large, strategic projects may justify in house capability, complemented by external specialists for complex or cross border bids. Smaller companies or those applying infrequently often prefer to use specialist advisers to avoid overloading internal teams.

How international should a grants strategy be for a UK life sciences SME?

Purely domestic businesses can succeed with UK schemes alone, but companies with European clinical sites, global ambitions or platform technologies should actively consider Horizon Europe and other international programmes. These bring larger budgets and networks, but also higher coordination demands and longer lead times.