Innovate UK Grants in 2025: What Sustainability Start-ups Need to Know

Only 2% of applicants won an Innovate UK Smart Grant in 2024. Just two per cent. 

If you’ve ever applied for innovation funding, certain that you have something genuinely innovative and yet still walked away losing, don’t worry, you’re not alone. The UK prides itself on supporting innovation and has a sizable budget to support it, but the system doesn’t always feel accessible, especially if you’re a startup working in sustainability.

So, what’s going on with Innovate UK and UKRI? And what’s changing in 2025 that impacts you?

It can get tough out there… 

We all know that innovation drives growth, but for the UK, the numbers tell a stark story. According to UKRI’s State of Innovation report, innovation across UK businesses is declining. Barriers are piling up, and the smaller your business, the more likely you are to hit them.

Over half of firms surveyed by Ayming (UK Innovation Barometer) said they’d find R&D grants useful in the year ahead, double the number from 2023, but many don’t even apply. Why? Because the process feels out of reach, too complex, too time-consuming and ultimately, too uncertain.

This disconnect is especially pertinent when you look at scale-ups. These are businesses already growing fast, often with proven products, but still struggling to access the capital needed to scale. The ScaleUp Institute found that while £400 million in Innovate UK grants led to an impressive £9.6 billion in private investment, scale-ups still want faster processes, better support, and clearer follow-on funding. The demand is there, but so is the frustration, too.

…and sustainability startups get hit extra hard.

If you’re building a sustainable product or technology, the challenges get even steeper.

Unlike software startups, many climate tech and deep tech ventures need real-world infrastructure such as hardware, lab time, and pilot plants, so capital costs are higher. Development cycles are longer, and often, the regulations you need to meet aren’t eligible to be covered by innovation grants at all.

Add to that the "valley of death", which is that tricky stretch between proof-of-concept and commercial viability, and you can see why sustainability startups often stall before they ever scale. Feasibility grants definitely help, but without follow-on support, progress slows. Investors, meanwhile, can be hesitant.  With long timelines comes higher risk and uncertain returns.

And then there’s the human side. Many sustainability startups are led by first-time founders, often from technical or academic backgrounds, and often from underrepresented groups or regions. They know their science, but navigating the complex world of Innovate UK applications, developing business plans, sometimes needing to create a suite of sales forecasts, cash flow forecasts, P&L and balance sheet? That’s a whole different skill set and is a steep learning curve.

But 2025 could be the turning point.

Change is happening, albeit slowly.

At the start of 2025, Innovate UK slowed down on the volume of grants released. Grant competitions were delayed; the Smart Grant, its most well-known, if notoriously competitive, fund, was paused. Why? Because a new government had arrived, and with it, a new Industrial Strategy with Sector Plans and a Plan for Change.

That strategy, called Invest 2035, sets out the UK’s vision for the next decade. It homes in on eight sectors, including clean energy, tech, and manufacturing, and it’s already shaping where funding flows.

Innovate UK, under new CEO Tom Adeyoola, is realigning its entire approach. Adeyoola has spoken openly about the need to bridge the gap between early-stage innovation and commercial success. He’s pushing for a more “business-centric, adaptive, outcome-focused” model. And while we’re still in the early days, some promising signs are emerging for the sustainability sector. 

Earlier this year, Tom Adeyoola appeared before the Science and Technology Committee to talk about the future of Innovate UK, and one comment stood out: the process, he admitted, is so complex that many applicants need a specialist just to get through it. That’s not the mark of an accessible system.

His solution was surprisingly candid: Maybe grants could be written by ChatGPT, for free. Maybe AI could help Innovate UK better filter and match applicants. Maybe, he suggested, the entire application process needs rebuilding from the ground up. It was a rare moment of institutional honesty, and one that suggests deeper structural changes may be coming. (The ChatGPT angle is a big one, and I’ll unpack that more in a future piece.)

The Growth Catalyst initiative launched with a focus on clean energy and tech, with likely more sectors to follow. A 10-point pledge was announced to support women in innovation, aiming to simplify the application process, provide clearer guidance, and make assessments fairer and more transparent. I’m hoping this pledge will apply broadly across all competitions.  

Even the structure of grant applications is changing. Fewer questions with different scoring systems, from 10 to 25. Fewer assessors, down from 5 to 3 to 1. Check the competition to find out the approach they are using (bottom of “How to Apply”).

All of this is good news: more candour, more clarity, and better accessibility are on the way. 

A shift to “place-based innovation” gives new options 

One of the shifts we’re seeing in 2025 is a move away from a national funding model to something more regional. 

As well as funding sectors, Innovate UK is starting to fund places, such as regions with defined Innovation Districts like Glasgow or Birmingham. These hubs bring together local government, universities, and anchor businesses to form ecosystems that can support startups not just with money, but with the infrastructure and collaboration they need to grow.

For sustainability founders outside of London, or in communities that haven’t historically received much support, this could be a game-changer, as funding may come into your local area. Place-based funding tied to missions like clean growth or circular economy could make innovation funding more accessible, more relevant, and more inclusive.

This is great if your area is getting funding, but if it isn’t?  Perhaps instead of scaling where you are now, consider lab space or delivering your pilot from a different region, where funding is more available.  The commute may be worth the funding. 

What should startups be doing now?

Whether you’re working in clean tech, regenerative materials, or AI for climate, the second half of 2025 could bring new opportunities. Innovate UK’s full strategic plan is expected later this summer, and it will make it clear what the next wave of support will look like.

Here’s what I’d suggest:

• Keep an eye on upcoming Innovate UK competitions, especially those tied to your region or mission.  If things aren’t great in your region, think about where your next steps could take you, geographically. 

• Make use of the Business Connect and No Limits platforms to find open calls and access support.

• If you’re new to grant funding, in particular if you need help with the commercials, look for support early, whether that’s through accelerator programme networks, grant funding consultancies, or industry networks to find potential collaborators.

• And importantly, don’t self-reject. If the old system felt out of reach and caused frustration, the new one may not be and could be easier to navigate.

Final thoughts

Sustainability startups are trying to solve some of the world’s biggest problems. They need a funding system that’s just as ambitious but far more accessible.

2025 might be the start of something better for those needing grant funding.

If you’re building for net zero or environmental/social impact, stay ready. Things are shifting, and the possibility of winning grant funding might be closer than you think.

Need help navigating innovation funding? At Sharp Insight, we specialise in research and funding support for early-stage impact businesses. Get in touch if you'd like to explore how we can help you access grants, collaborators, or research insight to validate that you’re on the right track.

Dr Chloe Sharp is the founder of Sharp Insight, a research and funding consultancy helping startups access innovation funding in the UK.

chloe@sharp-insight.co.uk