15.04.16
Access to EU funding vital for ‘survival’ of rail SMEs
The ability for rail SMEs to tap into EU funds to support innovation can be the difference between success and failure, Roy Freeland, president of Perpetuum, and SME lead for the Rail Supply Group, told RTM this week.
During a panel session on supply chain engagement at Infrarail, facilitated by RTM, he told the audience that his company had recently received two EU grants, adding: “We are very dependent on that sort of funding.”
While admitting there are aspects of the EU which aren’t wonderful, with regards to “confusing” and “complex” standards, he says that Perpetuum, a spin-out from the University of Southampton, really benefits from being part of the union.
“As a business, Perpetuum really benefits from being in the EU, from ready access to funding in the EU and from ready access to the EU markets – even helped by the EU who pay for things to help us contact customers,” he said.
“Innovative members can benefit very significantly from the EU. We would be finding it difficult to survive right now without the EU’s support, funding and the other help they give us.”
Just ahead of the formal launch of the In and Out campaigns in the run-up to the EU Referendum in June, Freeland noted that for SMEs the timescales of getting products to market and having the cash flows to sustain research can result in a “valley of death” for some companies.
“The problem is, while you are a small company and you’re trying to grow and you are putting money into your innovation, there are timescales to be dealt with and while you’re dealing with those timescales cash is pouring out of the door,” he said.
“When you’re a big company and have assisting businesses and cash flows to fund your research it is okay. Small companies speed to market is absolutely crucial for their survival. People talk about the valley of death for innovation: that is the gap between having a product that works and getting enough orders to sustain your cash flow and grow.
“That valley of death is where SMEs need help in funding. Venture capitals support my company but only to a certain point. But it is absolutely critical to try and reduce the timescales, and external funding [from the EU] is a vital part of help getting us over the valley of death.”
Freeland, who is also a council member of the Rail Supply Group, and its SME lead, added that the rail supply growth fund, launched in February this year, is a good example of helping SMEs enter the market.
The Finance Birmingham initiative is a national £20m Rail Supply Growth Fund and provides a flexible loan scheme. Its aim is to help remove the barriers to market entry, strengthening the capability of new and existing suppliers in the rail sector.
“We have already set up the Finance Birmingham supply fund which is providing very flexible loans for SMEs trying to break into the industry,” said Freeland.
“It is a great example of how you can work together between industry and government to assist with innovative ideas.”
(Image: c. Leo Reynolds)