How can SMEs fund research and development? It’s academic
For small- and medium-sized companies with limited funds, investment in R&D can be prohibitive. But there is help out there
Often, academic research unintentionally leads to a viable business. Photograph: iStock
Research and development is the pathway for businesses to expand and grow, but it can be an expensive and difficult process, with no guarantee of success. So how can companies spread the risk?
Peter Brown, director of the Irish Research Council (IRC), says the answer lies in working with academia. “A huge amount of the industry research is being carried out primarily by multinational corporations, but we know that small- to medium-sized companies in Ireland, including in the indigenous sector, are not as research-intensive as in other parts of Europe. Indeed, productivity is declining in these sectors. This is why programmes and schemes, such as those run with the IRC, are so important: they take out some of the risk for SMEs. And the long-term sustainability of these companies will depend increasingly on the extent to which they are innovative and open to innovation.”
Every year, the IRC provides grants to support about 280-300 postgraduate researchers and, of these, about 70-80 are for researchers who are collaborating with enterprise and employers (see below for more details).
“A benefit for the enterprise partner is that the IRC funds two-thirds of the costs,” says Brown. “SMEs, in particular, have limited funds so it can be hard for them to make the case as to why they should invest in R&D over business development or marketing. These programmes allow that R&D to happen.”
The programmes offer benefits both to career researchers and to companies or enterprise partners (which can include charities and State bodies). “Figures from the Organisation for Economic Co-operation and Development [OECD] show that investment in R&D is linked to productivity gains, and this is because innovative companies use the most cutting-edge technologies and tend to be the most efficient, which drives productivity. But many SMEs are smaller, family firms and they are wary of R&D, because it is inherently risky: you won’t necessarily know what the outcomes will be. It can be hard to free someone up and pay a wage for them to be creative and innovative. This is why research innovation needs public investment.”
Irish SMEs face a further obstacle in carrying out R&D: they’re up against the might of the big tech behemoths who have the resources to attract the best and most talented staff – and these SMEs struggle to compete on wages and conditions.
“The landscape can be complex and SMEs don’t always know where to start,” says Brown. “Enterprise Ireland is the overall advisory agency for high-potential SMEs, while Knowledge Transfer Ireland sets out the different options for SMEs. And groups such as the Industry Research Development Group can provide advice and support.”
Often, academic research unintentionally leads to a viable business. OxyMem, a spin-out from work carried out in chemical and bioprocess engineering at UCD in collaboration with Prof Eoin Casey, is a good example of how academics and industry can come together to build an innovative business solving a fundamental problem.
In 2013, the team realised their work, which allows less energy to be used in wastewater treatment by up to 75 per cent, had the potential to be commercialised. In 2014, they went on to win The Irish Times innovation of the year award. Today, the Athlone-based company employs 60 staff, primarily at its midlands plant.
“We didn’t start off our research with the intention of setting up a company,” says Eoin Syron, OxyMem’s chief technology officer. “We are still engaged in research on how we can improve performance, but we’ve been able to work with an IRC-funded PhD student, which allows us to allocate resources and time on research which, ultimately, will lead to a longer-term return on investment. But without this funding and opportunity to collaborate with academia, it would be hard to justify; with it, we can attract the brightest minds, and because we can offer a PhD, it allows us to bring in people who are looking both for a challenge and exposure to industry.”
Of course, these projects use public money – so what are the wider benefits? “OxyMem has generated employment and answered a wider environmental problem by reducing the energy and resource requirements for treating wastewater,” says Syron. “By working with academia, we can continue this development without having to remain focused entirely on short-term profitability, and we can look to future expansion.”
Within the IRC, Brown admits that industry-academic partnerships can tend to be more focused on science, technology, engineering and maths, but says that more firms, particularly in tech, are realising the importance of wider social issues and challenges around ethics and privacy, and that this is where they are increasingly paying more attention to arts and humanities graduates.
“Wherever they are from, both sides benefit from access and proximity to experts in their field who are pushing the frontiers of new knowledge,” says Brown. “For academics, being able to collaborate with industry while in the formative stage of their careers is important, particularly as around 90 per cent of PhD graduates won’t work in academia – and it can also generate new questions and leads to further discovery-oriented research. For industry, it allows them access to the best minds and to develop new innovations and ideas. It is a virtuous circle.”
Irish Research Council: Supporting enterprise
The Enterprise Partnership Scheme – now open for applications – brings together postgraduate researchers from a higher-education institution with an enterprise partner – this can be a registered charity, a not-for-profit, a State-owned enterprise, an eligible public body or a private company – to carry out research directly related to an organisation’s interests, with two-thirds of the costs covered by the IRC.
Meanwhile, the IRC’s Employment-Based Postgraduate Programme allows students to bring a research idea to an Irish employer, with the support of a higher-education institution, with the IRC contributing up to €24,000 a year to complete a degree by research.
For more information on these and other IRC programmes, see Research.ie