Frequently Asked Questions

In general, soft funding can be described as funding without the requirement for dilution of ownership or return on investment from the funding body. Grants are the most common form of soft funding, often given by public bodies or institutions for a specific end. In Europe, the most common avenues for obtaining grants are through national agencies or the European Commission. Grants are given for specific purposes, mostly intended to benefit society in some way, through the support of research and innovation, implementation of government policies, creation of knowledge, and job creation.

Contrary to soft funding, hard funding comes with the requirement to share some equity or repay received funding. The most general form of hard funding is to receive funding via a bank loan. However, a bank loan can be costly, in regard to interest, and may not be granted to companies in early stages without collateral, due to their higher risk. Another common form of hard funding is to raise capital from private investors (e.g., venture capital, angel investors, and family funds), which tend to invest in early-stage companies in return for equity percentage, putting themselves in a high-risk but high-reward situation. It is also possible to receive hard funding institutionally, through the European Investment Bank or the Innovation Fund.

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In theory, any person or entity can apply for soft funding. National agencies and the EU – and, by extension, its member states and associated countries – have several programmes and calls, targeting different types of entities.

To give a few European examples, soft funding can be obtained by individual researchers (e.g., from European Research Council) or entrepreneurs intending to establish SMEs (e.g., from European Innovation Council), individual SMEs or small mid-caps (e.g., via EIC Accelerator, a funding programme under Horizon Europe and organised by the European Innovation Council), consortia including research organisations, SMEs, associations, organisations, or start-ups (e.g., via EIC Pathfinder and Marie Skłodowska-Curie Actions, also under Horizon Europe and organised by European Innovation Council, as well as from Eureka).

Similar to soft funding, hard funding is theoretically available to anyone. However, the cost is proportionally linked to the level of risk associated with the endeavour. This means that a start-up, developing a new product or service, will be required to pay a higher interest or give up a larger equity position, making it costly or diluting the ownership. To obtain funding to develop ideas into market leading products and services, start-ups may obtain hard funding from private investors (e.g., venture capitalists, family funds, private equity, and banks) or institutional investors (e.g., Innovation Fund and European Investment Bank).

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Typically, soft funding actions are intended to overcome funding gaps not serviced by private capital markets. When you have an idea or knowledge that you need to take to the next level, the funding organisations are willing to share the risk with you and assist you in developing it. Thus, soft funding provides you with the means to develop a project you otherwise would not have been able to. Soft funding is also an opportunity to foster collaboration and widen your network, namely in collaborative calls where you apply within a consortium and can establish connections to other SMEs and research organisations, which are at the vanguard of knowledge and innovation. Finally, during the process, you will be able to mature and refine your idea, detailing the “what”, “how”, and “why” of the project. This will allow you to identify strengths and weaknesses, providing constant opportunities for improvement.

While soft funding is intended to overcome funding gaps not covered by private capital, hard funding is intended to take companies with fairly developed products and/or services to the market. Hard funding provides the means to finalise the development activities and proceed to scale up the company’s capabilities for production, sales, and management. It is possible to apply for hard funding earlier in the process, through seed investors or business angels, which allow companies to start developing products but take a higher stake of the business, due to the high risk involved.

For soft funding, it all starts with an “idea” which needs to be validated. The validation process comprises a comprehensive assessment of 1) novelty level and 2) match with targeted funding programme. Study the call text and make sure your project fits within the scope, priority areas and investment objectives. Then, ensure compliance with the formal requirements, i.e., status/size of the main applicant, establishment of a consortium (if applicable), financial eligibility, etc. When the validation is complete, it is time to prepare your written application. Read the application guidelines and prepare everything conforming to the mandatory templates (some programmes do not have a downloadable template and the application must be filled in online). Do not forget to perform quality assurance. Carefully check for coherence and consistency throughout the whole proposal and make sure your message is clear and sound. When your proposal is ready and finished, it is time to submit to the grant authority (ensure all mandatory documents and appendices are included) and wait for success! We are happy to help and support you throughout the whole process.

If we are to help you with hard funding, the first step is to validate if your company is compatible and desirable in regard to our pool of investors. This involves matching, for instance, sector of investment and investment amount targets. This will allow us to provide our investors with curated leads, which we have worked with and validated their technology, not wasting your nor our investors’ time. Then, we will provide each selected investor with your pitch deck, which we may need to tweak to improve your chances. From there, Innovayt will help you through negotiations and due diligence that may be required.

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Obtaining soft funding can be difficult and burdensome. First, it is easy to lose track of opportunities as the funding landscape is complex and ever-changing. Then, preparing an application is an exhaustive process that goes beyond putting an idea into words. Even within the same programme, guidelines and directives often change from call to call. You may need strategic partnerships, a well-calculated business plan, or even a powerful pitch. Finally, soft funding typically displays highly competitive frameworks, in which only the best and most differentiated proposals win. So, you need originality, creativity, strong analytical sense, and distinct presentation. Most applicants struggle as they do not have sufficient in-house knowledge, experience, or resources to maintain an overview of the funding landscape and develop a winning proposal. Thus, obtaining external help with applying for soft funding helps optimising your chance for a successful funding outcome.

Obtaining hard funding can also be difficult and burdensome. Despite investors always being on the search for new opportunities, they usually invest in sectors and/or people that they are already familiar with or know beforehand. Investors receive numerous undifferentiated pitch decks in their mailboxes, making it difficult to stand out and gain attention. Innovayt provides investors with a curated list of investments that matches their investment profile, while making sure the technologies are validated. This enhances the chances of our clients, putting us in the best position to help your company find a lead investor for your next funding round.

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The client’s involvement depends on selected consultancy model. In the full proposal model, Innovayt has the full responsibility of drafting the application. Tasks include overall process coordination; drafting the different sections as well as adjusting text to project idea; drafting budget; and, most importantly, thoroughly preparing an application that represents the strategic interests of the client while ensuring highest possible chances of success. Yet, even in this full model, we will always need input from your team to ensure a highly competitive application.

In the other available consultancy model, the assistance model, the client holds the overall responsibility for drafting and handing in the application while Innovayt assist according to agreed framework. In other words, the degree of assistance is set by the client and could range from review and quality control to taking control of the entire application process.

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