Updated 2026.
For startups and scaleups, extending cash runway is still one of the biggest priorities. Costs are higher than they were a few years ago, fundraising takes longer, and investors expect finance teams to be far more deliberate about how cash is used.

That means founders and finance leaders need to look beyond the obvious options. Equity funding and R&D tax credits still matter, but they shouldn’t be the only levers you pull.

Grants, incentives and targeted funding schemes are often overlooked. Not because they aren’t useful, but because they feel unclear, time-consuming, or not worth the effort. In reality, used selectively and at the right stage, they can make a meaningful difference.

R&D Tax Credits Are No Longer the Safety Net They Once Were

For a long time, UK R&D tax credits were the default for early-stage tech businesses. They were relatively generous, reasonably predictable, and often built into cashflow planning.

That’s changed.

Following a series of rule changes over the last few years, many startups now receive less than they expect, face more scrutiny, or don’t qualify at all. The Autumn Budget updates helped slightly, but R&D credits are no longer the reliable cash buffer they once were.

Personally, I don't include the refund in my budget or cash planning.  It's something I keep in my back-pocket and I don't rely on it.

They’re still worth pursuing where appropriate, but finance leaders should be realistic. R&D credits are now one part of the picture, not the plan.

Why Grants Matter More in 2026

In the current environment, grants and incentives play a different role. They’re not there to fund day-to-day operations, but they can:

• Support innovation and product development
• Reduce the cost of specific projects
• Extend runway without dilution
• Add credibility in investor conversations

The key is knowing what to look for and when it’s worth the effort.

UK Government Grants and Targeted Schemes

The UK still has a wide range of grant schemes, but they’re far more targeted than many founders expect. Most are designed to encourage specific behaviours such as innovation, export growth, sustainability, or collaboration with research institutions.

Innovate UK remains one of the most relevant bodies for startups with a genuine innovation angle. Their competitions are competitive and time-consuming, but they can be meaningful if your product roadmap aligns with the brief.

There are also more practical schemes that often get missed, such as funding to support international trade activity, digital adoption, or specific capability building. These won’t change the trajectory of your business on their own, but they can reduce pressure on cash at the right moment.

Regional Funding Is Often Underrated

One area that’s consistently overlooked is regional funding.

Outside London (or your capital city or large city), there are still local growth hubs, councils and regional development bodies offering grants and low-interest loans. These are often smaller amounts, but they’re also more accessible and quicker to secure.

For startups looking for modest funding to support hiring, equipment, or expansion into new regions, this type of support can be far more realistic than chasing a large national grant.

If you’re advising founders, it’s always worth checking what exists locally before defaulting to high-street banks or expensive debt.

Personally, this is where I have been successful with grant funding.  Both regional and the following....

Sector-Specific and Innovation Grants

Some of the most valuable grants are sector-specific. These tend to focus on technology, climate, health, data, or projects with a clear social or environmental angle.

On the European side, UK businesses can still access certain EU innovation programmes post-Brexit, particularly where collaboration or advanced research is involved. These are not quick wins, but for the right type of business, they can be substantial.

Be Honest About the Time Cost

This is the part that’s often glossed over.

Grants are not free money. They require:

• Time
• Clear project definition
• Strong financial modelling
• Ongoing reporting

Poorly targeted applications waste a huge amount of management time. As a finance leader, part of your role is to help founders decide which opportunities are worth pursuing and which ones aren’t.

In many cases, the right answer is to apply for fewer grants, but do them properly.

How Grants Fit Into a Sensible Funding Strategy

Grants and incentives work best when they sit alongside other funding sources. They can support innovation, reduce risk, and strengthen the overall funding story, but they rarely replace equity or revenue growth.

In 2026, investors expect finance leaders to show that they’ve explored all sensible options and made deliberate choices. Understanding grants and incentives is part of that professionalism.

Not because every startup should apply, but because good finance leadership knows when it makes sense.

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