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Future Innovation Fund Pilot – What we learned from Round 1

When the COVID-19 pandemic hit, we instantly felt the huge impact it was having, or was about to have on our businesses in the City Region. In one of the earliest business surveys Growth Platform sent out – back in the days when we were all still working from an office – 96% of businesses that responded had already been impacted by the pandemic, and 71% had already experienced a decrease in sales. We knew we were only at the beginning of what was soon to become the most severe recession on record.

Like many businesses have had to do, Growth Platform and the Liverpool City Region Combined Authority had to “pivot”. Our whole business support offer became focussed on supporting businesses through the crisis. We set up a dedicated helpline for businesses who needed advice and support, set up a business resilience support scheme, and launched new programmes including Gather (including the Mettle and Shift resilience programmes), Sustain (which have all been delivered by Form) and Kindred.

We understood that businesses were seeking additional funding, but we also recognised that local resources were simply too limited to help the 52,000 businesses across the City Region. That would take billions of pounds, far more than the £3m we had available to us. We knew that we couldn’t meaningfully use this for business interruption funding; it would not be able to support enough businesses to have any real impact on our local economy. For that, we had to rely on the programmes being delivered at a national level by central government. We were also keen not to duplicate any national measures that were evolving at pace (for example CBILS, furlough scheme etc).

As we were working up options on how best to use the limited funds available to us, we were encouraged to see a level of innovation and collaboration across the City Region’s business community that we had never experienced before. We recognised an opportunity to use our limited funding to catalyse this level of innovation and collaboration, whilst aligned to our local strategic priorities (as identified in our draft Local Industrial Strategy). The Future Innovation Fund was born.

Knowing we had to act quickly, and would not get everything exactly right first time, we designed the fund as a pilot. The pilot would be delivered in three competitive rounds of funding (or “calls”) as a Test and Learn so that we could continuously improve each round, based on evidence, learnings and feedback from the last.

Our ambition is that by the end of the pilot, we will have demonstrated the amount of fundable innovation projects happening across the City Region and optimised the instrument to fund them, capable of attracting further funding from central government.

So, what did we learn from round 1, and what improvements have we made?

1 – The application process

We know that the software we are using for you to submit your applications is not completely fit for purpose, and we ask applicants to be patient with us on this. Current resources and procurement challenges mean this isn’t an option for the pilot phase. Once we have secured further funding, we plan to invest in dedicated grant administration software, to make the process more user friendly. For now, we strongly recommend that you complete your application in an offline word document initially, save a copy, then copy and paste into the online application form.

We also realised the application questions in the first round were not always easy to answer concisely and were, in places, repetitive. We have broken down the application form so that there are more questions, but the questions are much shorter and more focussed. For example, in the section on Social Value, we wanted to be really clear about what we were asking, and what we expect recipients of funds to strive for in terms of social value enhancing activity. There is space for you to leave feedback at the end of your application – please let us know how we are doing in the second round.

2 – The assessment process

The most important part of the assessment process is completed by our pool of independent, industry assessors. We ran an open recruitment process for our assessors and initially wanted a large pool to draw on; we had no idea how many assessors we might need in the first round as we couldn’t accurately forecast how many bids we would receive. Each bid was sent out for one assessment, with random sampling to check for consistency of assessment.

We have taken steps to make the assessor pool more representative and proportionate to the number of assessments required in the second round. In this round, each eligible bid will be sent to three different assessors, with the median score carried through to the next round of the assessment process. Whilst this incurs a greater administration cost, we think this is an important change to our process to ensure fairness and consistency.

Secondly, we recognise the need for greater transparency in our assessment process, and for applicants to be able to see upfront how their bid will be assessed. We will be making the scoring matrix available (on the pilot website) for all applicants before they complete their application. We note this is a particularly high level of transparency; other comparable funding competitions do not typically publish their assessment criteria.

3 – Equality, Diversity and Inclusion

The Combined Authority and Growth Platform are committed to promoting equal opportunities through the Pilot both in who we fund, and importantly, what we fund. Whilst we don’t have robust evidence base on the diversity of our City Region’s business community, the results of the first round did not meet our own expectations. We are determined to improve our process for future rounds to address this.

The pilot was designed and informed by legal advice, including in relation to how the Combined Authority could best support its diversity and inclusion objectives whilst acting in compliance with the requirements of the Equality Act. Legal advice was that any steps that could potentially favour one applicant over another, based on equality and diversity factors, needed to be supported by a robust evidence base of under-representation in targeted groups.

Accordingly, in the first round we collected data on the protected characteristics of applicants (specifically, for legal GDPR reasons, the individual that submitted the online application form on behalf of the applicant organisation) and assessors through a diversity monitoring form.

  • 71% of applicants identified as male;
  • 91% of applicants were white; and
  • 8% of applicants considered themselves to have a disability or impairment.

This approach of collecting equality and diversity data through the first round, and using this as an evidence base to identify and promote the inclusion of under-represented groups through subsequent rounds, is in line with recent legal guidance on how public authorities can support under-represented groups and address inequalities in a fair and transparent fashion, in compliance with legal requirements.

This has shown us that we must take action to improve the reach of all of our programmes to under-represented groups, not just the Future Innovation Fund pilot, and strive for a more diverse pool of applicants into our programmes.

It is not just diversity of the founders of the organisations we fund that is important to us, but also their wider workforce and how the organisations and activities we fund can actively improve outcomes for disadvantaged and under-represented groups. We know to achieve this our processes must be free from bias. We cannot fix either of these overnight, but we are making some immediate improvements for the second round.

  • In our application form, we have included more focussed questions to challenge applicants on how their organisation and activities will improve outcomes for under-represented groups.
  • A representative from the Fairness Social Justice and Advisory Board (FASJAB) will sit on the Combined Authority’s internal investment panel where final allocation of awards is determined.
  • We have taken additional legal advice on how we can access and use diversity monitoring information at the portfolio allocation stage to ensure we are supporting a more diverse mix of founders, organisations and projects. We are doing this in consideration of the ethical impact of the fund but also the protection of privacy for applicants.
  • We are working with the Combined Authority’s Race Equality Group to explore longer-term solutions, including, for example, additional unconscious bias training for assessors.
  • The Combined Authority plans to undertake an inclusive workplaces survey to better understand the diversity of our business community. This should help us understand, to a greater extent, whether our policies and programmes are representative of the diversity we have in the City Region.

4 – Size of grant award

We were overwhelmed by the significant demand we experienced in the first round of the pilot. We had £16m of funding requested for only £1m of available grant funding and over 230 applications. We want to maximise the impact of our funding, and so we have decided to reduce the maximum grant amount a business can apply for from £100k to £75k. This will help the £1m go further and increase the number of organisations we are able to support.

The ambition

This is only the start of what we can achieve. The pilot has demonstrated the truly amazing level of innovation taking place in the City Region, and the significant number of fundable propositions. We now need the funding to support that activity. We are lobbying government for a £20m scaled-up innovation fund for the City Region that we believe will be a game changer for our business ecosystem.

We know this fund can be a success, and we want your help in achieving that aim. Please get in touch with your ideas, suggestions, and let us know how we can improve.

The Future Innovation Fund team