Innovate UK is set to overhaul its funding strategy, shifting away from broad-based support for hundreds of thousands of “innovators” each year to concentrate its £1.1 billion budget on a smaller pool of high-potential companies.
The government’s innovation agency said the move is designed to accelerate the growth of early-stage technology firms capable of scaling into globally competitive businesses, with ambitions to create more UK success stories on the scale of chip designer Arm.
The strategic pivot marks a significant departure from Innovate UK’s previous ambition to support “a million innovators” annually. While the agency reached around 450,000 individuals in 2024, only a small proportion received direct financial backing, prompting concerns that resources were being spread too thinly to deliver meaningful economic impact.
Tom Adeyoola, who took over as executive chair last year, said the shift reflects a more targeted approach focused on outcomes rather than volume.
“It is a shift from a focus on quantity and funding projects to supporting companies and ensuring that they realise their potential,” he said. “We want to help businesses move from breakthrough ideas to becoming industry leaders that drive economic growth.”
Under the new strategy, Innovate UK will scale back or eliminate several longstanding grant schemes, including the widely used Smart Grants programme, which Adeyoola described as too broad due to its “stage agnostic” and “sector agnostic” design.
In its place, the agency will introduce more tightly defined funding streams aligned to specific sectors and stages of business growth. Programmes such as Women in Innovation will also be refocused to support female-led firms with high-growth potential rather than providing generalised support.
The agency has identified six priority sectors from the government’s industrial strategy where it believes the UK has a “genuine right to win”. These include advanced manufacturing, life sciences and digital technologies — spanning areas such as artificial intelligence, semiconductors and quantum computing.
At the same time, Innovate UK is launching a new concierge-style support service, “Velocity”, aimed at helping selected companies navigate funding, regulation and commercialisation challenges more effectively.
A key pillar of the revised approach will be the expansion of targeted funding initiatives such as the £100 million 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 more closely align its network of Catapult centres, applied innovation hubs, with the needs of specific companies rather than broader sector engagement.
Adeyoola said Innovate UK would play a more active role in identifying market demand and matching it with emerging technologies, effectively acting as a bridge between research, entrepreneurship and commercial opportunity.
“We will spend more time identifying where demand exists and then supporting the entrepreneurs and academics best placed to meet that demand,” he said.
Central to the strategy is a renewed emphasis on leveraging private investment. Innovate UK believes that its technical validation and endorsement can act as a signal to investors, reducing risk and unlocking additional capital for high-growth firms.
“A key measure of success over my four-year period will be the amount of private capital flowing into companies coming through our system,” Adeyoola said.
To support this, the agency plans to strengthen links with major public finance institutions including the British Business Bank and the National Wealth Fund, while continuing to deliver approximately £1 billion of innovation programmes on behalf of other government departments.
While the new approach is designed to create globally competitive businesses, it raises questions about access to support for smaller or earlier-stage innovators who may fall outside the new criteria.
Innovate UK argues that concentrating resources will ultimately deliver greater economic returns, helping 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 fostering widespread participation in innovation to backing fewer, more scalable companies capable of delivering outsized growth and long-term economic impact.
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Innovate UK pivots funding to back high-growth firms and future ‘industry giants’
