Innovate UK will overhaul its funding strategy, moving away from broad-based support for hundreds of thousands of “innovators” each year and focusing its £1.1 billion budget on a smaller pool of high-potential companies.
The government’s innovation agency said the move aims to accelerate the growth of early-stage technology firms capable of developing into globally competitive businesses, with the aim of creating more UK success stories on the scale of chip designer Arm.
The strategic pivot marks a significant departure from Innovate UK’s previous target of supporting “one million innovators” annually. While the agency reached about 450,000 people in 2024, only a small proportion received direct financial support, raising concerns that resources were being spread too thinly to make a meaningful economic impact.
Tom Adeyoola, who took over as chief executive last year, said the shift reflected a more targeted approach focused on results rather than volume.
“It is a shift from focusing on quantity and funding of projects to supporting companies and ensuring they reach their potential,” he said. “We want to help companies go from groundbreaking ideas to industry leaders that drive economic growth.”
Under the new strategy, Innovate UK will scale back or scrap several long-standing funding schemes, including the widely used Smart Grants scheme, which Adeyoola described as too broad due to its “stage agnostic” and “sector agnostic” design.
Instead, the agency will introduce more strictly defined funding streams targeted at specific sectors and stages of business growth. Programs such as Women in Innovation are also being refocused to support women-led businesses with high growth potential, rather than providing general support.
The agency has identified six priority sectors of the government’s industrial strategy where it believes the UK has a “real right to win”. These include advanced manufacturing, life sciences and digital technologies – including areas such as artificial intelligence, semiconductors and quantum computing.
At the same time, Innovate UK is launching Velocity, a new concierge-style support service designed to help select companies address funding, regulatory and commercialization challenges more effectively.
A key pillar of the revised approach will be the expansion of targeted funding initiatives, such as the £100m Growth Catalyst scheme, which provides grants covering up to 70 per cent of early-stage project costs and up to 45 per cent for larger research and development programmes.
The agency will also refocus its business growth advisory service and focus its network of Catapult Centers, applied innovation hubs, more closely on the needs of specific companies rather than broader industry engagement.
Adeyoola said Innovate UK will play a more active role in identifying market demand and adapting it to new technologies, effectively acting as a bridge between research, entrepreneurship and commercial opportunities.
“We will spend more time identifying where the need is and then supporting the entrepreneurs and academics who are best positioned to meet that need,” he said.
At the heart of the strategy is a renewed emphasis on mobilizing private investment. Innovate UK believes its technical validation and advocacy can be a signal to investors, reducing risk and unlocking additional capital for high-growth companies.
“A key measure of success during my four-year term will be the amount of private capital flowing into companies through our system,” Adeyoola said.
To support this, the agency plans to strengthen links with major public financial institutions, including the British Business Bank and the National Wealth Fund, while continuing to deliver innovation programs worth around £1 billion on behalf of other government departments.
While the new approach aims to create globally competitive companies, it raises questions about access to support for smaller or earlier innovators who may not fall under the new criteria.
Innovate UK argues that concentrating resources will ultimately deliver greater economic returns and help the UK compete more effectively in critical technologies and strengthen its position in an increasingly competitive global innovation landscape.
The strategy signals a clear shift in government thinking, from encouraging broad participation in innovation to supporting fewer, more scalable companies capable of delivering outsized growth and long-term economic impact.
